The year 2022, when the global economy was supposed to have recovered from the negative effects of the COVID-19 pandemic, has been difficult for the economies of South and Southeast Asia.
Instead, the Russian invasion of Ukraine, along with other issues like soaring inflation, supply chain hiccups, and repeated COVID lockdowns in China, have dimmed growth prospects and hurt both businesses and households’ finances.
A number of Asian currencies have seen their value decline relative to the US dollar as a result of the US Federal Reserve’s aggressive interest rate increases to curb spiralling inflation.
This has made some countries’ debt problems worse, reduced their purchasing power, and forced their central banks to raise interest rates to support their currencies as a result.
Rising import prices for fuel, food, and other goods have led to economic crises in some nations and the depletion of their foreign exchange reserves.
The International Monetary Fund (IMF) has already provided support to Sri Lanka and Pakistan in South Asia after they experienced debt distress and balance-of-payments issues.
Experts anticipate a difficult economic climate in 2023 due to weakening global growth prospects for the US, the eurozone, and China as well as tightening financial conditions.
The growth predictions for developing Asia have all been lowered by the World Bank, IMF, and Asian Development Bank.
Predictions indicate that trade-oriented economies like Singapore, Thailand, Vietnam, and Malaysia will be particularly impacted by the slower global expansion.
The investment bank Natixis’ chief economist for Asia Pacific, Alicia Garcia Herrero, predicted that weaker international demand and tighter monetary conditions will hinder regional growth.
