IMF trims developing Asia growth forecasts on China slowdown

SINGAPORE (ICIS)–The International Monetary Fund (IMF) has trimmed its growth forecasts for emerging and developing Asian economies, mainly due to lower projections for China.

Growth in emerging and developing Asia is expected to rise from 4.5% in 2022 to 5.2% in 2023, before declining to 4.8% next year, representing downward revisions of 0.1 percentage point and 0.2 percentage point for 2023 and 2024, respectively, the IMF said in its latest World Economic Outlook (WEO) report released on 10 October.

China, India, Indonesia, Thailand, Malaysia, Vietnam and Philippines belong to the IMF category of emerging and developing nations in Asia.

China’s growth forecast for 2023 was lowered by 0.2 percentage point to 5.0% in 2023, while for next year the forecast was trimmed by 0.3 percentage point to 4.2%.

“With the property market crisis in that country [China], lower investment is the main contributor to the revision,” the IMF said, adding that the extent of China’s slowdown will depend largely on the government’s policy response.

“Should concerns about financial stability in China fester, the impact could be felt in other emerging market economies through exchange rate volatility and destabilising capital flows,” it added.

Growth in India is projected to remain strong, at 6.3% in both 2023 and 2024, with an upward revision of 0.2 percentage point for 2023, reflecting stronger-than-expected consumption during April-June.

India’s economic growth stood at 7.2% in 2022, according to the IMF.

As for the ASEAN-5 economies – Indonesia, Malaysia, the Philippines, Singapore, and Thailand – growth is expected to moderate to 4.2% in 2023 from 5.5% last year, representing a 0.4 percentage point cut from the IMF’s previous forecast.

Global GDP growth for this year is expected to decline compared to 2022, to 3.0% compared to 3.5%, despite growing expectations of a soft landing to the inflation crisis.

Focus article by Nurluqman Suratman