KUALA LUMPUR: The Asia Pacific economy should avoid recession in 2023 as recoveries continue among domestic economies around the region, Moody's Analytics said.
The firm said the regional economy, in aggregate, would accelerate from 3.2 per cent expected in 2022 to 3.5 per cent in 2023.
This, however, was only because China - the largest economy in the region - would rebound in the second half of 2023 as it began working through the multiple challenges that it faced.
This included the lack of resolution of debt within the property development sector, China's restrictive zero-COVID policies in place through November of this year, the expected surge in Covid-19 cases in the first half of 2023 due to the easing of most restrictions within an environment of little herd immunity, limited public health capacity and a lack of mRNA vaccines approved for use in China.
Moody's Analytics said Hong Kong's economy also would improve in 2023 from the long recession it had faced over the past year due to Covid-19 restrictions and the lack of international mobility.
"Nearly all of the rest of the region will decelerate in 2023 as it faces multiple global challenges. The region's export economies face less demand from Europe and the US as the developed markets face the possibility of recession in 2023."
Moody's Analytics exoects interest rates to remain high as central banks will likely follow the lead of the US Federal Reserve to staunch inflation and protect foreign exchange rates.
"Inflation will ease, but at a gradual pace through 2023. And weak demand from China also will stymie the region's growth, as there will be less demand for intermediate goods from China's manufacturing industries," the firm added.