Asia’s emerging market economies are driving global growth and are expected to outperform advanced counterparts in terms of GDP growth in 2023 and 2024, even if activity remains subdued by historical standards, said Atradius recently.
The firm forecast that emerging market economies’ GDP growth will be 3.9% this year overall and 3.8% in 2024.
Among Asia’s emerging market economies, China is estimated to achieve a GDP growth of 5.1% in 2023, the firm added.
Highlights of Asia’s emerging market economies
China
- The country’s GDP is forecast to expand 4.6% in 2024. The economy still has some momentum from the removal of Covid restrictions earlier this year, but it is slowing.
- Consumers went on a spending spree during the first quarter of 2023, when the economy reopened, but a large part of this boost disappeared over the second quarter.
- The waning of consumer-led growth into next year will highlight some fundamental challenges with the Chinese economy.
- Investment remains weak with growth largely supported by the state.
- Housing demand is a notable challenge, with new housing starts and sales at just 45% and 65% of Q2 2021 levels.
- Exports are subdued due to weak demand from key markets.
- The good news is that, unlike many economies, inflation is under control, and China even experienced slight deflation in July (-0.3% year-on-year).
- Russia’s invasion of Ukraine has had only a limited effect so far, thanks in part to self-sufficiency in coal and staple grains. The result is that consumer-led growth is not being throttled by rocketing prices.
India
- India's economy is estimated to grow by 6.0% in 2023 and 6.3% in 2024.
- Growth was supported by a falling inflation rate in the first two quarters, but the latest figures show a significant leap due to the irregular monsoon season.
- India’s central bank decided to pause interest rate hikes at 6.5% on the lower inflation figures delivered earlier this year, but a rate cut is unlikely in the near future now that inflation is rising again.
- Elsewhere, manufacturing production growth continues to weaken, and we expect fixed investment growth of 8.0% in 2023, down from 10.3% in 2022.
- Sluggish imports and exports are also a concern.
- Government debt is likely to reach 84% of GDP on average this year, but should gradually decrease after the most recent budget prioritised fiscal prudence.
