The reopening measures in China will not only aid towards easing the raw material shortage in the APAC region but will also contribute towards the growth of other sectors, including tourism and hospitality.
The Asia-Pacific (APAC) region is facing several challenges including financial tightening, high price levels, and weakening external demand. Additionally, the ongoing crises in Pakistan, Myanmar, Sri Lanka, and deteriorating relations between Taiwan and China are significant areas of concern for the region. Consequently, the region’s risk score increased from 42 to 42.4 out of 100 in Q4 2022. Despite this increase in risk, the region is expected to serve as a beacon of hope for the global economic outlook for 2023, reveals GlobalData.
In the 19th update version of GlobalData’s “Global Risk Report Quarterly Update – Q4 2022,” which evaluated 32 countries in the APAC region, eight countries were identified in the very low risk zone, three countries in the low-risk zone, nine countries under manageable risk, nine countries under high risk and three countries in the very high-risk zone.
Puja Tiwari, Economic Research Analyst at GlobalData, comments: “Despite facing several challenges, APAC is predicted to be a ray of hope in an otherwise bleak global economic outlook this year. The reopening of China, known as the ‘World’s factory’, coupled with the resilient performance of India and sustained growth in other emerging Southeast Asian countries, is anticipated to be the primary driver of the global economy in the upcoming year.”
GlobalData’s report reveals that Turkmenistan, Myanmar, Pakistan, Bhutan, and Laos remained highest-risk nations in APAC in Q4 2022. On the other hand, Singapore, Taiwan (Province of China), the New Zealand, Hong Kong, Japan, and South Korea were on the list of the top 15 lowest-risk countries worldwide in Q4 2022.
The ongoing political crisis, depreciating national currency, significant shortage of energy and mounting inflation rate in Pakistan are pushing millions of people into monetary poverty. High levels of debt, food crisis, and mismanagement of government finances led to an economic crisis in Sri Lanka. Myanmar is also facing a looming food crisis and a dramatic increase in childhood malnutrition due to persistent high prices exacerbated by a decline in food production.
Major economies in the APAC region registered elevated level of inflation rate in 2022, since global supply chain disruptions contributed to supply-demand imbalances, leading to a broad-based increase in prices. Most central banks embarked on contractionary monetary measures.
GlobalData forecasts inflation rate in the region to ease to 3.9% in 2023, compared to 4.2% in 2022, supported by tight monetary policy across the region. High borrowing costs will continue to be a key challenge for major economies in the APAC region.
Tiwari concludes: “The reopening measures in China will not only aid towards easing the raw material shortage in the APAC region but will also contribute towards the growth of other sectors, including tourism and hospitality. Additionally, employment opportunities are expected to grow at a healthy pace in the region, which is likely to keep the domestic demand at a consistent level.”