The key driver for the improvement in APAC regional growth will be from the rebound in growth momentum in mainland China due to the easing of COVID-19 restrictions.

The easing of COVID-19 restrictions in mainland China is forecast to boost its GDP growth rate from 3 per cent in 2022 to 5.3 per cent in 2023.

This will be the key driver for APAC's GDP growth rate rising from 3.2 per cent in 2022 to 4.2 per cent in 2023, despite headwinds from moderating global growth momentum due to economic slowdowns in the United States and the European Union (EU).

The APAC macroeconomic outlook for 2023 is expected to remain resilient to the recent financial shockwaves caused to the US banking system, provided that US financial stability risks remain contained by the US financial regulatory authorities, Rajiv Biswas from S&P Global Market Intelligence wrote.

The latest Caixin China headline purchasing managers’ index (PMI), compiled by S&P Global, increased from 49.2 in January to 51.6 in February, thereby signalling an improvement in overall business conditions across China's manufacturing sector.

Though modest, it marked the first expansion for seven months, with the reading being the second-highest recorded by the survey since May 2021.

The rebound in mainland China's economy is expected to have significant positive effects on the rest of the APAC region. The economies of Hong Kong and Taiwan have already shown early signs of a turnaround in economic activity given the close economic and trade ties with mainland China's economy, the analysis remarked.

In the ASEAN region, strong domestic demand has continued to support economic expansion in a number of large economies. The headline S&P Global ASEAN manufacturing PMI posted expansion for the seventeenth month running in February. Moreover, the pace of growth across the sector improved further, with the index rising from 51 in January to 51.5.

The Indian economy has also continued to show expansionary economic conditions in early 2023. The S&P Global India manufacturing PMI was 55.3 in February—with little change from 55.4 in January—and signalled continued expansion in the manufacturing sector.

In the first ten months of fiscal 2022-23, India's manufacturing output has risen by 4.8 per cent year on year.

Fibre2Fashion News Desk (DS)