South Indian cities lead the way in a difficult year
While we expect 2023 to be a difficult year for cities in the Asia Pacific region, we still see some bright spots. Notably, we expect cities that are less exposed to weak global trade and those with strength in fast-growing sectors to show some resilience. Furthermore, Chinese cities will probably benefit from a loosening of Covid-19 related restrictions in 2023. Bengaluru’s and Hyderabad’s economies will most likely continue to outperform their Asia Pacific and Indian peers in terms of growth in 2023, with the information and communication sector as their main driver. Bengaluru’s large information and communication sector will help it weather the global downturn in goods trade.
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- Furthermore, while Ho Chi Minh City’s growth will slow significantly in 2023, we expect it to remain among the fastest growing cities in the region, in part due to global supply chain diversification. Also, we expect Bangkok to be one of the few cities in APAC to have its economic growth accelerate in 2023. The return of tourists is a key driver of this forecast.
- In China, Shanghai and Beijing will probably benefit from a 2023 less marked by Covid-19-related restrictions. Recent announcements do seem to point in that direction, but the road to normality is still long. Although consumer-oriented sectors such as retail trading and hospitality are expected to do better than industry, the pace at which consumer confidence improves will be tentative.
- Among advanced APAC cities, we expect Taipei to do better than Seoul, which in turn will outperform Tokyo in terms of GDP growth in 2023. We forecast the Taiwanese capital to benefit from its lagged reopening and from catch-up growth in 2023. In Australia, we see Brisbane performing relatively well helped by healthy demographic growth.
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