INTERNATIONAL MONETARY FUND
REGIONAL
ECONOMIC
OUTLOOK
ASIA AND PACIFIC
Recovery Unabated
amid Uncertainty
2023
MAYWorld Economic and Financial Surveys
REGIONAL
ECONOMIC
OUTLOOK
ASIA AND PACIFIC
Recovery Unabated
amid Uncertainty
2023
MAYCopyright (c)2023 International Monetary Fund
Cataloging-in-Publication Data
IMF Library
Names: International Monetary Fund, publisher.
Title: Regional economic outlook. Asia and Pacific : recovery unabated amid uncertainty.
Other titles: Asia and Pacific : recovery unabated amid uncertainty. | Recovery unabated amid uncertainty. |
World economic and financial surveys. | Regional economic outlook: Asia and Pacific.
Description: Washington, DC : International Monetary Fund, 2023. | World economic and financial surveys. |
May 2023. | Includes bibliographical references.
Identifiers: ISBN:
9798400238062 (paper)
9798400238093 (epub)
9798400238123 (web PDF)
Subjects: LCSH: Economic forecasting—Asia. | Economic forecasting—Pacific Area. | Asia—Economic conditions. |
Pacific Area—Economic conditions. | Economic development—Asia. | Economic development—Pacific Area.
Classification: LCC HC412.R445 2023
The Regional Economic Outlook: Asia and Pacific is published twice a year, in the spring and fall, to review
developments in the Asia and Pacific region. Both projections and policy considerations are those of the
IMF staff and do not necessarily represent the views of the IMF, its Executive Board, or IMF Management.
Publication orders may be placed online, by fax, or through the mail:
International Monetary Fund, Publication Services
P.O. Box 92780, Washington, DC 20090 (USA)
T. +(1) 202.623.7430
F. +(1) 202.623.7201
publications@IMF
IMFbookstore
elibrary.IMFContents iii
Contents
Acknowledgments.................. v
Definitions.................... vi
Executive Summary................vii
Outlook for Asia and Pacific: Recovery Unabashed amid Uncertainty. ......1
Resilient Growth Despite Multiple Shocks…..........1
Volatile Financial Conditions and Persistent Core Inflation….............3
Outlook: Dynamic Growth and Continuing Inflation Pressures..........4
Risks to the Outlook Remain Tilted to the Downside........8
Policies to Mitigate Risks and Support Growth............ 10
References................. 18
BOXES
Box 1. State-Dependent Exchange Rate Pass-Through............. 19
Box 2. Corporate Sector Vulnerabilities amid Rising Interest Rates....... 21
FIGURES
Figure 1. Growth Surprises..................1
Figure 2. Growth Drivers in Asia in 2022..........2
Figure 3. China Mobility and Retail Sales..........3
Figure 4. Financial Conditions..............4
Figure 5. Inflation Developments...........5
Figure 6. Global Growth Contributions...........6
Figure 7. China’s Reopening.................6
Figure 8. Contributions to GDP Growth...........7
Figure 9. External Demand and the Global Technology Cycle.......8
Figure 10. Headline Inflation Expected to Decline.............9
Figure 11. Risk of Stickier Inflation.................9
Figure 12. Response of Real GDP and Investment to a US Monetary Policy Shock..... 10
Figure 13. Exposure to Medium-Term Risks.............11
Figure 14. Real Interest Rates in Asia............ 12
Figure 15. Cumulative Change in Short-Term Interest Rates and Taylor Rule–Implied Interest Rates...... 12
Figure 16. Recent Exchange Rate Fluctuations and Implications for Inflation.......... 13
Figure 17. Financial Fragilities in Asia............ 14
Figure 18. Asia: Cyclically Adjusted Primary Balance......... 15
Figure 19. Asia: Primary Balances under Different Scenarios....... 16
Figure 20. Total Electric Vehicle Sales........... 17
Box Figure 1.1. Exchange Rate Pass-Through into Inflation......... 19
Box Figure 1.2. Pass-Through Determinants........... 20
Box Figure 2.1. Cash and Debt in Vulnerable Firms under Stress Scenarios..... 22
TABLES
Table 1. Asia Real GDP.............. 24
May 2023 o INTERNATIONAL MONETARY FUND