Asia’s economic growth will outpace both the U.S. and Europe this year, led by strong domestic demand, according to Morgan Stanley.
“The big argument that we’ve been making for Asia, including Japan, to outperform versus the U.S. and Europe — is the fact that there is domestic demand strength,” Chetan Ahya, chief Asia economist, told CNBC’s “Street Signs Asia” on Monday.
“China is one. It’s going through a rebound quite nicely because of reopening, but also for fiscal and monetary policy being supportive.” Three other large Asian economies — India, Indonesia and Japan — are also showing robust domestic demand, added the economist.
“We are expecting the region’s growth to outperform by about 500 basis points by the end of this year, which is essentially in the fourth quarter of this year,” said Ahya.
His bullish forecast for the region corresponds with the latest International Monetary Fund views that Asia Pacific remains a dynamic region despite a challenging year for the world economy.
The agency pointed out last week that Asia’s domestic demand has so far remained strong despite monetary tightening.
“We project the region will contribute more than 70 % of global growth this year as its expansion accelerates to 4.6 % from 3.8 % last year,” the IMF wrote in a blog. On Tuesday, China is expected to release gross domestic product data, which is estimated to have grown 4% in the first quarter of this year, according to a Reuters poll. China’s recovery is “going better than everybody’s expectations,” said Ahya, and he doesn’t see inflation as a major risk for the country.
More people in China want to buy houses again, according to a first-quarter survey recently released by the People’s Bank of China.
The World Bank also expects East Asian and Pacific economies to grow more than it previously estimated, thanks to a sharp rebound in activities in China, noting that the region hasn’t been affected by global banking stresses. (www.cnbc.com)