Expert Insight: Amid global uncertainty IMF forecasts ‘Emerging & Developing Asia’ to be the fastest growing region

by Nick Parsons, Head of Research

• ‘Emerging and Developing Asia’ to grow 5.3% in 2023, 5.1% in 2024

• World economic growth now seen at 2.8% in 2023, 3.0% in 2024

• GDP of ‘Emerging and Developing Asia’ set to rise more than 30% by end-2028

Summary: A rocky recovery

The global economy is facing multiple challenges. Ongoing energy supply disruptions following Russia’s invasion of Ukraine, a cost of living crisis resulting from higher prices and falling real wages, and a newly-apparent fragility in the global banking system are all weighing on economic activity.

The new IMF forecasts

In its latest World Economic Outlook1  published in April 2023, the International Monetary Fund updated its estimates for global GDP growth for this year.  The world economic forecast for 2023 is nudged up from a 2.7% growth rate expected six months ago to 2.8%. Growth in the major advanced economies (G7) is raised from 0.8% to 1.1%, while the Euro area is raised from 0.5% to 0.8%.

The striking feature of the IMF’s new projections, however, is the extent to which ‘Emerging & Developing Economies’ – and most especially ‘Emerging & Developing Asia’ – are once again set to outperform the rest of the world. Indeed, the 30-country ‘Emerging & Developing Asia’ region is forecast to grow by 5.3% in 2023; almost twice as fast as the world aggregate, five times greater than G7 and seven times the pace of the Euro area.

Equally as impressive as the 2023 growth projections, are the IMF’s forecasts for ‘Emerging & Developing Asia’ over the next five-year period from 2024 to 2028. With an average growth rate of 4.8% per annum over the period, the region is once again at the top of the IMF’s forecast table.

The average annual forecast growth rate of 4.8% means that at the end of 2028, the annual GDP of the ‘Emerging & Developing Asia’ region will have risen almost 33% from the end of 2022. This compares to a little over 19% for the World aggregate, and just 9% for the Euro area and the Major advanced economies (G7).

Of course, there is a greater than usual uncertainty around any central economic projections due to the ongoing war in Ukraine, a global cost of living crisis and the policy response from fiscal and monetary authorities worldwide. 

Nevertheless, the forecast profile set out by the IMF in its latest World Economic Outlook strongly supports ThomasLloyd’s strategy of investing exclusively in the fast growing countries of ‘Emerging & Developing Asia’. 

In the period 2023-28, the IMF expects real GDP in this region to grow by almost 30%; a substantially better performance than either the Major advanced economies or the Euro area. With rapid population expansion and continued migration from rural areas to the major cities, this economic growth will drive both increased household incomes and electricity consumption. Investment in sustainable infrastructure is vital for the energy transition which both Asia and the world urgently need for climate change mitigation and economic prosperity. 

The investment opportunity is already compelling and the newly updated growth forecasts from the IMF are another positive tailwind for the ThomasLloyd proposition.