S&P sees Vietnam, Philippines, India delivering fastest growth in Asia

“We see the fastest growth at about 6% in India, Vietnam, and the Philippines. Growth in the region ex-China should pick up to 4.4% in 2024 amid easier monetary conditions and somewhat better global growth,” S&P Global Ratings Asia-Pacific chief economist Louis Kuijs said in the rating agency’s report “Economic Outlook Asia-Pacific Q3 2023: Domestic Demand, Inflation Relief Support Asia’s Outlook” published the same day.

The overall picture of Asia-Pacific economies has improved slightly in the past three months, said the report. It said that while it nudged down its growth forecast for China to 5.2% from 5.5%.

“China’s recovery should continue but at an uneven pace, with investment and industry lagging,” Kuijs said.

“Other Asia-Pacific economies are on track to slow due to the global slowdown and interest rate hikes. Still, domestic resilience should ensure meaningful growth.”

S&P forecast 3.8% GDP growth in 2023 for Asia-Pacific excluding China, after 4.7% in 2022. “Inflation and external deficits are receding; pressure on central banks to raise rates has diminished. Calls for rate cuts will grow louder,” the report said.

Kuijs added, “We expect U.S. policy rates to increase and see them starting to fall only in 2024. The strain on Asia-Pacific markets and currencies will consequently persist for the rest of 2023. Modest sequential core inflation is largely alleviating the need for rate hikes. However, rate cuts will be slow to materialize, in part because of persistently high rates in the U.S.”

S&P expects the Bank of Japan to remain very careful, tightening monetary policy meaningfully only if it sees signs that the rise in inflation will endure.

Its Monday forecasts for Vietnam and the Philippines are similar to the World Bank’s prediction for the two countries, which is 6%, in its June edition of “Global Economic Prospects” earlier this month.

The global bank added this growth rate remained among the highest in Asia. In January, the bank estimated Vietnam’s 2023 GDP growth at 6.3%.

Vietnam posted economic growth of 3.32% in the first quarter of 2023 compared to a year earlier, the General Statistics Office reported. The first quarter’s performance came amid current global economic headwinds, with the U.S. and European banking sectors facing a crisis of confidence, and significantly lower than the 5.92% growth rate in Q4/2022.

The country's economy expanded by 8.02% in 2022, much higher than the 2.58% recorded in 2021 during the height of the pandemic.

Source: The Investor