Over the past 12 months, Asia has been buffeted by overlapping international crises, including the COVID-19 pandemic and the Russia-Ukraine conflict.
But there is a good case for cautious optimism about Asia’s prospects for 2023. China has taken measures to stabilize the real estate market and reversed course on a zero-COVID strategy that imposed great economic costs. In Japan, substantial household savings will support consumption. India’s economic boom looks set to continue — propelled by massive investments in physical and digital infrastructure and manufacturing capacity, and tourists are returning to Southeast Asia. Bangladesh, the Philippines, India and Vietnam are among the countries expected to record the region’s highest growth rates next year.
Yet there are potential obstacles to regional recovery, including soft global demand that could hold back economies with a high dependence on exports, like the Republic of Korea and Taiwan. Following are five major risks to Asia’s growth prospects and stability in 2023.
Monetary Tightening
The Fed’s campaign to control inflation through a series of interest rate rises has impacted Asian currencies and markets. The rise in food and energy prices has caused inflation to exceed central bank targets in most Asian economies. Tight labor markets…
