Global Economic Outlook 2023: Asia Edition

We are seeing a recovery in Asia’s economic growth as industrial activity and services reactivate and consumption rebounds thanks to a relaxation of COVID-19-related restrictions and the reopening of borders in many countries—with the notable exception of China. GDP growth in the region is expected to soften gradually over our forecast period of 2024–35, though it will remain above the global average. Developing Asia will be the main driver of regional growth. There is a caveat, however: downside risks are rising due to a slowdown in external demand, rising inflationary pressures, and the deterioration of the geopolitical environment.

Insights for What’s Ahead

• With a strong rebound early this year, Asia’s economy is expected to continue its recovery path for the rest of 2022 and into 2023, mainly driven by a relaxation of COVID-19-related restrictions and continued recovery in consumption.
• But the region is also facing mounting headwinds, and businesses should prepare for continued disruption in the years ahead. Geopolitical volatility is rising, affecting energy and food security as well as global supply chains.
• Asia’s economic prospects are expected to soften gradually over our long-term forecast period (2024–35). Developing economies in Asia will have relatively higher growth potential than developed ones thanks to rising domestic demand and continued improvement in technology and human capital.
• Facing these challenges, many Asian nations are increasing the role of their domestic markets in driving overall growth and shifting the focus of their export industries to markets closer to home. This is advancing Asia’s regionalization, with the Regional Comprehensive Economic Partnership being the latest example of this trend.

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