AMRO cuts ASEAN+3 region's 2023 growth forecast to 4.3%

06 Oct '23

2 min read

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Insights

The ASEAN+3 region's projected growth for 2023 has been adjusted to 4.3 per cent from July's projection of 4.6 per cent, due to China's slower Q2 growth.
While 2024 growth remains at 4.5 per cent, global economic challenges and rising inflation pose concerns.
Potential US and euro area recessions could further impact growth of the ASEAN+3 region.

The Association of Southeast Asian Nations Plus Three (ASEAN+3) region is forecast to grow by 4.3 per cent in 2023, down from July’s projection of 4.6 per cent, mainly due to the weaker-than-expected growth in China in the second quarter, according to the October quarterly update of the 2023 ASEAN+3 Regional Economic Outlook (AREO) by the ASEAN+3 Macroeconomic Research Office (AMRO).

AMRO maintained its 2024 growth forecast for the ASEAN+3 region. AMRO expects the region to expand by 4.5 per cent in 2024, as the impact of China’s policy support measures to boost domestic demand materialises more fully.

Despite the less sanguine outlook for the global economy next year, growth in the region will be supported by the expected turnaround in manufacturing exports and improving growth momentum in China, as per AMRO.

This, along with the gradual pick-up in durable goods consumption in the US and the anticipated recovery of the global technology cycle, should boost regional exports next year amid expected weakness in the global economy.

Inflation in the ASEAN+3 region—excluding Lao PDR and Myanmar—is forecast to moderate to 2.6 per cent in 2024, from this year’s estimate of 2.9 per cent. However, the resurgence of global energy prices in recent months is sparking concerns of another commodity price spike, with the risk of higher inflation becoming more salient.

AMRO also warns against fully discounting the risk of recession in the US and euro area, especially in an environment where global interest rates could stay higher for longer. Should recession in both economies materialise, growth in the ASEAN+3 region could slide below 3 per cent—the lowest since 1998 barring the pandemic-induced slowdown of 2020.

“Despite the gloomy headlines surrounding China’s economic performance, we must view things in perspective,” said AMRO chief economist, Hoe Ee Khor. “Manufacturing investment is holding up and consumer spending is starting to get back on track—these should have positive spillover effects across the rest of ASEAN+3.”

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