How will emerging asia fare in 2023?

How will emerging asia fare in 2023?

  • Post-pandemic normalization in factor markets and government policy, as well as domestic and international political shifts will work under the hood of the world order.
  • These processes may trigger surprises such as heightened geopolitical shocks and rivalries, but there may be upsides that Southeast Asia can take advantage of.
  • Early 2023 will be difficult, but we expect global growth to hold better than expected due to China’s reopening, post-pandemic normalization, and technological change.
  • A new asset pricing regime may result in more financial stresses, as asset prices that have inflated greatly in the 2010s have yet to price in the end of the low-rate, easy-money era.

Cautious optimism for china’s 2023 growth prospects

  • Dynamic zero-covid has been buried decisively, paving the way for an economic rebound. However, underlying weaknesses mean that the recovery will be a muted one.
  • Consumption, investment, and export growth face significant headwinds arising from weak external demand and scarred investor and household sentiment.
  • An accommodative policy stance towards business activity may offset some of the headwinds, but government capacity to implement expansionary policy is diminished.

Regional updates

  • South Korea’s trade and manufacturing performance for Dec 22 continues to deteriorate, leaving the central bank with a delicate balancing act for its upcoming decision.
  • Taiwan also faces export headwinds, and indicators of consumer and producer sentiment are downbeat. Disinflationary progress faces a setback due to higher food prices.
  • India’s preliminary GDP figures show strong FY23 growth driven by domestic demand.
  • Malaysia’s prime minister Anwar Ibrahim faces a difficult balancing act in resolving the impasse between component members of his coalition following the Sabah political crisis.
  • Singapore’s labour market shows signs of cooling, but wage pressures persist.

Read more: CAA-Weekly-13-Jan-2023.pdf