The International Monetary Fund (IMF) predicts that Asia-Pacific will drive more than half of global growth this year, despite lowering its forecast for the region’s mature economies due to growing concerns. GDP growth forecasts for advanced economies such as Singapore, South Korea, and Australia have decreased by 0.4% compared to the IMF’s last forecast in October.
The multilateral lender highlighted that the region’s overall GDP growth is forecast to rise to 4.6% in 2023, accounting for more than 70% of global economic growth. It also increased its forecast for emerging Asia’s growth by 0.4%.
Singapore and New Zealand’s anticipated GDP growth in 2023 declined the most among advanced economies, by 0.8% to 1.5 and 1.1%, respectively. The estimate came as data revealed the city state’s GDP growth decreased by 0.7% in the first quarter, reversing a modest expansion in the fourth quarter of 2022.
Singapore’s Monetary Authority cautioned on Friday that the island nation’s economic recession could be more severe than anticipated. However, the central bank maintained its key monetary measure unaltered due to predictions that inflation would continue to fall. The MAS also stated that it would maintain a 0% annual rate of appreciation of the policy band known as the nominal effective exchange rate, or S$NEER.
On the financial front, the IMF encouraged Asian lenders to “remain vigilant,” despite the fact that they have been mostly shielded from contagion risks associated with the US and European banking crises. It stated that economies such as South Korea and Singapore could still face losses, owing to falling asset values in assets such as real estate that they invest.