Asian Recovery Slowed by Fed Hike Acceleration
2023 Forecast Revised Down, Growing Concerns on China
As the COVID-19 pandemic winds down, Asian economies are on a recovery track supported by strong exports. Nevertheless, the growth rate forecast for 2023 has been revised downward for each country surveyed. This is because the U.S. Federal Reserve's hasty interest rate hikes will cool the U.S. economy and lead to a slowdown in exports from Asia. Currency depreciation and inflation will accelerate, forcing countries to follow the U.S. in raising interest rates. There are also growing concerns about the slowdown of the Chinese economy, and it seems that each country will face the challenge of sustaining its economy through increased domestic investment to compensate for exports.
The Japan Center for Economic Research and Nikkei conducted the twenty-seventh quarterly consensus survey on Asian economies from September 2 to 22, asking about the economic outlook for 2022-2024. It collected 35 answers from economists and analysts in the five largest members of the Association of Southeast Asian Nations—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—and in India.
Economists’ average forecast of the economic growth rate of the five ASEAN countries in 2022 is 5.0%, unchanged from the previous survey in June. In the second quarter of 2022, Malaysia's exports were strong and its GDP growth accelerated faster than expected, but Singapore and Thailand fell short of expectations. The ASEAN growth rate is expected to slow down after peaking at 5.9% in the third quarter and fall to 4.3% in 2023, a downward revision of 0.5 points from the previous survey.
India's growth rate forecast in fiscal 2022 is 7.0%—relatively high but revised downward by 0.2 points from the previous survey. The outlook for fiscal 2023 is 6.0%, which has also been revised downward by 0.2 points.
The outcome of this survey was also reported at Nikkei Asia. (October 3, 2022)
◆ Main points of the survey
- The average 2022 growth rate forecast of five ASEAN countries is 5.0%, unchanged from the previous survey in June. The ASEAN growth rate is expected to slow after a third quarter peak and then to fall to 4.3% in 2023, a downward revision of 0.5 points from the previous survey. India’s growth rate forecast in fiscal 2022 is 7.0%, revised downward by 0.2 points, and the outlook for fiscal 2023 is also revised down 0.2 points to 6.0%.
- The U.S. Federal Reserve’s aggressive rate hike may lead to a slowdown of the U.S. economy. The Fed revised its 2022 U.S. economic growth forecast to 0.2% in September. A U.S. slowdown could lead to weaker exports from Asia, which would weigh on Asian economic growth in 2023.
- The possibility of a Chinese economic slowdown caused by the zero-COVID policy and real estate deflation has grown into a significant risk for the Asian economy. Asian countries may face the challenge of sustaining their economies, compensating for exports through increased domestic investment.
Indonesia: Dendi Ramdani, head of industry and regional research department, Bank Mandiri; Umar Juoro, senior fellow, The Habibie Center; Wisnu Wardana, chief economist, PT Bank Danamon Indonesia Tbk.; Juniman, chief economist, Maybank Indonesia
Malaysia: Suhaimi Ilias, chief economist, Maybank Investment Banking Group; Wan Suhaimie bin Wan Mohd Saidie, head, economic research, Kenanga Investment Bank; Vincent Loo Yeong Hong, senior economist, KAF Research; Mohd Sedek Jantan, head of wealth research & advisory, UOB Kay Hian Wealth Advisors Sdn. Bhd.
Philippines: Jonathan Ravelas, chief market strategist, BDO Unibank Inc.; Samantha Teng, research and business analytics, Metrobank; Victor Abola, senior economist, University of Asia and the Pacific; Carlo Asuncion, chief economist, Union Bank of the Philippines; Jojo Gonzales, managing director, Philippine Equity Partners Inc.; Mitzie Conchada, associate dean, school of economics, De La Salle University
Singapore: Manu Bhaskaran, CEO, Centennial Asia Advisors; Randolph Tan, director, Centre for Applied Research, Singapore University of Social Sciences
Thailand: Poonyawat Sreesing, senior economist, Siam Commercial Bank – Economic Intelligence Center; Lalita Thienprasiddhi, senior resercher, Kasikorn Research Center; Krungsri Research Team, Bank of Ayudhya PCL; Amonthep Chawla, head of research, CIMB Thai Bank
India: Punit Srivastava, head of research, Daiwa Capital Markets India; Dharmakirti Joshi, chief economist, CRISIL; Anshuman Khanna, assistant secretary general, Federation of Indian Chambers of Commerce and Industry, FICCI; Tirthankar Patnaik, chief economist, National Stock Exchange of India; Bidisha Ganguly, chief economist, Confederation of Indian Industry; Aurodeep Nandi, India economist, Nomura India
For multiple countries: Euben Paracuelles, chief economist, Nomura Singapore; Brian Tan, Regional economist, VP, Barclays Bank, Singapore; Shreya Sodhani, regional economist, Barclays Bank, Singapore; Rahul Bajoria, director, regional economist, Barclays Bank
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