Global economy, policy shifts result in Asia’s growth slowdown: UNCTAD

Downside risks from China’s sharper-than-expected slowdown, global economic weakness and policy changes in advanced economies could mean Asia’s growth slows further to 2.2 percent next year, pushing real GDP below its pre-COVID-19 trend stays at the end of 2023.

Although the Asian region has shown relatively dynamic growth rates over the past decade, it is by no means immune to these deteriorating global conditions. According to the United Nations Conference on Trade and Development (UNCTAD) Trade and Development Report 2022, East and Southeast Asia are projected to experience growth rates well below those observed in the five years prior to the COVID-19 pandemic.

China’s slowdown, global economic weakness and policy shifts in advanced economies could mean Asia’s growth will slow further next year to 2.2 percent, pushing real GDP below its pre-COVID-19 level by the end of 2023. trend will be. Despite its dynamic growth rates over the past decade, Asia is by no means immune to negative global conditions.

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The global economy is expected to grow by 2.6 percent in 2022. This is 0.9 percentage points below the rate forecast in last year’s report and broadly in line with the March update.

“The economic slowdown will set back the implementation of the 2030 Agenda for Sustainable Development”, UNCTAD Secretary General Rebeca Grynspan according to a UNCTAD press release.

In East Asia, UNCTAD’s baseline scenario calls for 3.3 percent expansion this year, compared to 6.5 percent growth in 2021.

A combination of factors – including a significant increase in the prices of the region’s imported commodities, a weakening of global demand for the region’s exports and tightening international monetary conditions – is weighing on growth across the region.

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For 2023, UNCTAD expects a moderate growth revival in the region to 4.3 percent.

Growth in East Asia is heavily influenced by that of the Chinese economy. UNCTAD expects economic activity in China to slow significantly to 3.9 percent in 2022.

Although a moderation in the growth rate was expected compared to the dynamic recovery observed in 2021, the imposition of strict lockdown restrictions has resulted in a slower slowdown than initially envisaged, with downside risks.

Notwithstanding an easing of credit conditions by the authorities, uncertainty weighs on consumer spending.

In the Republic of Korea, growth is expected to slow to 2.2 percent in 2022. High household debt and rising inflation are dampening consumer spending. With inflation being mainly imported, the impact of monetary tightening on prices is likely to be very limited.

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UNCTAD expects growth to slow further to 2 percent in 2023 as weaker external demand hurts export sector; In addition, tighter fiscal and monetary policies are expected to weigh on consumption and investment spending.

For Southeast Asia, UNCTAD estimates growth at 4.1 percent in 2022, but rising inflationary pressures and subsequent tightening of domestic monetary policy and costlier international financing conditions are dampening activity.

For 2023, UNCTAD expects the region’s growth rate to slow to 3.8 percent amid sluggish global trade growth and the expected impact of tightening domestic monetary policy as the region’s historical vulnerability to financial and exchange rate instability weighs on policymakers’ heads.

Fiber2Fashion Newsdesk (NB)

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