Regional Economic Outlook, Asia and Pacific, October 2023: Challenges to Sustaining Growth and Disinflation

The Asia-Pacific region remains a key driver of global growth in 2023, despite facing headwinds from changing global demand from goods to services and tighter monetary policies. The region is expected to grow by 4.6 percent in 2023, up from 3.9 percent in 2022. However, growth is projected to slow to 4.2 percent in 2024 and 3.9 percent in the medium term, as China's structural slowdown (Chapter 3 explains) and lower productivity growth in many other economies dampen the region's potential. Inflation is expected to decline in 2024 and stay within central bank target ranges in most countries, a faster pace of disinflation than in other regions (Chapter 2 explains.) Risks to the outlook have become more balanced than they were six months ago, although they still lean to the downside. Central banks should carry through with policies to ensure that inflation is durably at appropriate targets. Tight monetary policy should be complemented with careful financial supervision and modernized resolution frameworks to safeguard financial stability. Credible medium-term fiscal frameworks and consolidation can preserve fiscal space and debt sustainability.