APAC GDP Poised to Expand by 3.8%: S&P Global

According to S&P Global, the Asia-Pacific gross domestic product (GDP) excluding China is expected to expand by 3.8% in 2023. According to the research, inflation and external deficits are declining, and central banks are under less pressure to raise interest rates.

Policy rates in the United States are predicted to rise before beginning to fall in 2024. As a result, the impact on Asia-Pacific markets and currencies will continue through 2023.

Based on S&P Global's Economic Outlook Asia-Pacific Q3 2023 report, China's recovery will not be enough to offset the impact of the slowdown in the US and Europe in 2023, especially given the domestic services-led nature of China's growth, which limits the spillover via imports.

In the first quarter of 2023, weak exports generally impacted Asia-Pacific GDP growth. This external weakness led to negative GDP growth in trade-exposed economies like Singapore and Taiwan.

Robust domestic demand across the region lessened the overall impact on growth. Large economies like India and Japan even witnessed accelerating GDP growth due to domestic resilience.

For instance, in India, the March quarter outperformed expectations, leading Statistics India to revise its whole-year GDP growth estimate in fiscal 2023 (ending March 30) upwards from 7 per cent to 7.2 per cent, indicating a strong recovery from COVID-19.

In Japan, buoyant private consumption and investment pushed GDP growth above anticipations. Across the region, lingering reopening dividends helped boost private consumption growth beyond 4.5 per cent year-on-year in all but four of the 12 economies for which disaggregated national accounts data is available.

However, S&P Global expects the impact of higher interest rates to become more visible in the second half of 2023, especially in countries like Australia, New Zealand, and the Philippines, which have had the largest interest rate increases.