Asia a 'bright spot' in bleak global economic landscape: China’s Boao Forum report

SINGAPORE: Asia is expected to increase its pace of economic growth even as the global economy slows down and risks breaking up further, according to an annual economic outlook report by the Boao Forum for Asia (BFA) in China.

The report, released on Tuesday (Mar 28), said Asia is expected to continue to advance regional production, trade, investment as well as financial integration and cohesion.

“Asia is a bright spot in the bleak global economic landscape, and global economic governance (enters) into the ‘Asian moment’,” said the report.

It added: “Asian economies are champions of reform of the multilateral trade system, deeply involving themselves in global monetary and financial governance and promoting the development of and cooperation in the digital economy.”

The report also called for closer cooperation among Asian countries at a time when global supply chains are being regionalised and Western developed economies are increasing interest rates.

The Asian Economic Outlook and Integration Progress report was published on the first day of the four-day forum in Hainan, touted as Asia’s version of the Davos World Economic Forum. 

The World Bank said on Monday that an anticipated economic slowdown in China is likely to drag global growth down to its lowest level this century.

The lingering impact of the COVID-19 pandemic, the war in Ukraine and volatilities in the financial sector are slowing the global economy, which the World Bank predicted will expand by just 1.7 per cent this year.

The Boao Forum report acknowledged the influence China’s economic growth has on output for the rest of Asia, and estimated Asia’s weighted real GDP growth rate to be 4.5 per cent in 2023.

This is up from 4.2 per cent two years back, making the continent a “standout performer” considering the global slowdown, it said.

The report highlighted how global dependence on Asian trade in goods remained stable, with trade dependence between Asian economies staying at a “relatively high level”.

“Although global supply chains have experienced various disruptions in recent years, self-reliance among Asian factories has been enhanced and Asian economies continue to play an irreplaceable role in global value chains,” it noted.

“ASIAN MOMENT”

Asia is also playing “a more proactive and leading role” in coordinating global macroeconomic policy, the report said, pointing to how the continent hosted the G20 summit last year and will hold another this year.

But the report urged Asia to address a sustained increase in debt levels in its emerging markets and developing economies, citing multiple rounds of interest rate hikes by many Asian economies.

It attributed these hikes to similar cycles in developed economies like the US and Europe, and offered the “strong recovery” of the Chinese economy as a bulwark against such external impacts.

The report warned that Asia’s labour market has not fully recovered, although it said that increasing stability of the exchange rates of major Asian currencies will help reduce imported inflation pressure.

“In 2023, inflation pressures in Asia are expected to ease, but the factors that push inflation up and down may coexist,” it said.

The report also called on Asia to work closer as a group to address global industrial chain disruptions and secure the supply of critical products.

“Asia should take advantage of the regionalisation of global industrial chains and actively promote regional economic integration,” it said.

Singapore Prime Minister Lee Hsien Loong as well as Malaysian Prime Minister Anwar Ibrahim are among the attendees at this year’s Boao Forum, with China’s new premier Li Qiang set to speak on Thursday.

Inaugurated in 2001, the Boao Forum is a platform aimed at promoting common development through regional economic integration. 

Among the events held at the four-day forum include those related to the global economic and health development, climate change, as well as China’s Belt and Road initiative.