A public screen displays stock market data in Shanghai, China, Monday, October 10, 2022.
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Asia’s economic growth will overtake each the US and Europe this year, because of strong domestic demand, based on Morgan Stanley.
“The massive argument we’re making… for Asia, including Japan, to outperform the US and Europe – is that domestic demand is powerful,” Chetan Ahya, Asia’s chief economist, told CNBC’s “Street Signs Asia”. ” on Monday.
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“China is one in every of them. They’re recovering quite well due to the reopening, but additionally due to the supportive fiscal and monetary policies.”
Three other major Asian economies — India, Indonesia and Japan — are also showing solid domestic demand, the economist added.
“We expect growth in the region to surpass around 500 basis points by the end of this year, which is actually the fourth quarter of this year,” Ahya said.
His bullish outlook for the region is consistent with the International Monetary Fund’s latest view that the Asia-Pacific region stays a dynamic region despite a difficult year for the global economy.
The agency identified last week that Asian domestic demand has up to now remained strong despite the monetary tightening.
“We project the region to contribute greater than 70 percent of worldwide growth this year as its expansion accelerates to 4.6 percent from 3.8 percent last year,” IMF wrote on the blog.
Rebound in the real estate market in China
China is predicted to release its gross domestic product on Tuesday, which is estimated to have grown by 4% in the first quarter of this year. Reuters poll.
China’s recovery is “going higher than everyone expected,” Ahya said, and he doesn’t see inflation as a significant risk to the country.
“Inflation is a lagging data point and I do not think we must always take a look at the inflation data and conclude that the recovery isn’t going as planned,” he noted, adding that China’s real estate sector is “rebounding so sharply” which will boost the pace of growth .
In line with a recent survey by the People’s Bank of China, more people in China wish to buy houses again. The rise comes after the end of Covid controls in China. Last year, support for the purchase of real estate and developers was also launched by central and local governments.
The The World Bank can also be expected East Asia Pacific economies will grow greater than previously estimated because of a pointy recovery in activity in China, noting that the region has not been hit by global banking tensions.
India also shows strong growth potential on account of cyclical aspects, Ahya said.
“The banking system has been cleaned up, [the] the corporate sector has deleveraged,” noted the economist.
Consequently, there was a “nice acceleration in credit growth” as each borrowers and lenders have an appetite for risk, he added.
“India can also be implementing supply-side reforms that boost business confidence and boost private investment,” Ahya noted. “India is a history of a mix of cyclical and structural aspects.”
— Evelyn Cheng and Jihye Lee of CNBC contributed to this report