News Jul 23 23

Vietnam, Philippines, India to deliver fastest growth in Asia: S&P

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By Thuy Tuong

Mon, June 26, 2023 | 3:24 pm GTM+7

S&P Global Ratings has estimated Vietnam’s 2023 economic growth at 6%, citing the nation’s resilience, making it the fastest-expanding economy in the Asia-Pacific region.

“We see the fastest growth at about 6% in India, Vietnam, and the Philippines. Growth in the region ex-China should pick up to 4.4% in 2024 amid easier monetary conditions and somewhat better global growth,” says S&P Global Ratings Asia-Pacific chief economist Louis Kuijs.

His assessment is carried in the international rating agency’s newly released report titled “Economic Outlook Asia-Pacific Q3 2023: Domestic Demand, Inflation Relief Support Asia’s Outlook.”

Workers at a Hyundai Thanh Cong car factory in Ninh Binh province, northern Vietnam. Photo courtesy of Hyundai Thanh Cong.
Workers at a Hyundai Thanh Cong car factory in Ninh Binh province, northern Vietnam. Photo courtesy of Hyundai Thanh Cong.

The overall picture of Asia-Pacific economies has improved slightly in the past three months, the report says even as it nudges down its growth forecast for China to 5.2% from 5.5%.

“China’s recovery should continue but at an uneven pace, with investment and industry lagging,” Kuijs says.

“Other Asia-Pacific economies are on track to slow down due to the global slowdown and interest rate hikes. Still, domestic resilience should ensure meaningful growth.”

S&P forecasts a 3.8% GDP growth in 2023 for the Asia-Pacific region excluding China, less than the 4.7% in 2022. “Inflation and external deficits are receding; pressure on central banks to raise rates has diminished. Calls for rate cuts will grow louder,” it says.

It cites Kuijs as saying: “We expect U.S. policy rates to increase and see them starting to fall only in 2024. The strain on Asia-Pacific markets and currencies will consequently persist for the rest of 2023. Modest sequential core inflation is largely alleviating the need for rate hikes. However, rate cuts will be slow to materialize, in part because of persistently high rates in the U.S.”

S&P expects the Bank of Japan to remain very careful, tightening monetary policy meaningfully only if it sees signs that the rise in inflation will endure.

Its Monday forecasts for Vietnam and the Philippines are similar to the World Bank’s 6% for the two countries in its June edition of “Global Economic Prospects” released earlier this month.

This growth rate remained among the highest in Asia, the World Bank noted. In January, the bank estimated Vietnam’s 2023 GDP growth at 6.3%.

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