KUALA LUMPUR, Sept 25 — The Asia Pacific region (Apac) remained a multi-speed region, with its developed economies undergoing soft landings and seeing low but positive growth, while the emerging market economies are poised for robust expansions, said S&P Global Ratings.
S&P said it expected China to continue to contain its macroeconomic stimulus following a property-driven downturn.
The research house cut China’s growth forecast for 2023 to 4.8 per cent from 5.2 per cent and to 4.4 per cent from 4.8 per cent in 2024.
“For the rest of the region, domestic resilience has caused us to slightly increase our forecast for 2023 growth to 3.9 per cent, and we maintain it at 4.4 per cent for 2024.
“Renewed property weakness has weighed on China’s growth. Housing sales and starts slid again since April, affecting the economy directly and indirectly, via backward linkages to heavy industry and forward ones to sectors such as white goods,” it noted.
S&P said slowing global demand has weighed on the region’s exports whereby in Apac, excluding China and Vietnam (where such data is not available), year-on-year real export growth slowed from 5.9 per cent in the first quarter to -2.5 per cent in the second quarter.
It added that the deterioration was especially pronounced in emerging market economies.
However, S&P said domestic economies have shown resilience amid interest rate increases with most emerging market economies where demand has gained support from the re-establishment after the pandemic of the buoyant secular consumption trend and from the lower impact of higher interest rates than in developed economies.
Investment growth was also held up, it said, with the real year-on-year expansion easing one percentage point (ppt) to 4.1 per cent in the second quarter and momentum remaining buoyant in emerging markets.
“Capital expenditure growth was notably strong in Australia, India, Malaysia and New Zealand. But it was weak in Hong Kong, Singapore, and, in particular, Taiwan,” it said.
S& P Global said growth in the region has generally remained resilient, with year-on-year gross domestic product (GDP) growth picking up in the second quarter in both developed and emerging Asian economies.
It said that India led again, with GDP growing 4.2 per cent quarter on quarter to a level 7.8 per cent up on a year ago.
“Taking stock, since the fourth quarter of 2019, which is before Covid-19, India and China grew by 19.6 per cent and 16.9 per cent, respectively, by far the most among major economies. Southeast Asia has done relatively well since mid-2022, overtaking Asian developed market economies and the United States,” it said.
S&P opined that 2023’s growth will be weaker than in 2022, but the outlook remains broadly favourable.
“Overall, we expect the region excluding China to grow by 3.9 per cent in 2023, compared with 3.8 per cent in June. We keep our 2024 forecast at 4.4 per cent, with the pick-up over 2023 due to a gradual improvement in external demand and monetary policy easing,” it added.
— Bernama
