Research Briefing | Oct 27, 2022

Unprecedented mix of challenges hurts APAC’s 2023 outlook

Asian economies are no strangers to economic setbacks. Over the last 25 years there have been three significant shocks: the Asian Financial Crisis (AFC) of 1997-1998, the bursting of the Dotcom Bubble in 2001, and the Global Financial Crisis (GFC) in 2008. Asian economies bounced back smartly each time. Even as structural scars remained, growth returned quite quickly and was sustained. However, this time is likely to be different.

What you will learn:

  • Asia economies face an unprecedented combination of headwinds, including a global growth slowdown, China posting a lower growth rate than we have seen since reforms started over 40 years ago, the Fed raising rates and effectively forcing Asian central banks to follow, and higher oil prices.
  • Looking to 2023, we think external environment will weigh heavily on the export-focussed region. Consumption demand is likely to be hampered by a need to rebuild savings. Investment will take time to improve. Governments have limited fiscal space to counter a renewed downturn.
  • We forecast continued US dollar strength, meaning Asian currencies will remain weak. Pressure on currencies and supply-led domestic inflationary pressures will likely result in policy rates remaining high across the region.
Oxford Economics Asia 2023 economic forecasts
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