According to the International Monetary Fund (IMF), the growth rate in the Asia-Pacific region is expected to increase from 3.8 percent recorded in 2022 to 4.6 percent in 2023. In its Regional Economic Outlook - Asia and Pacific report released on Tuesday, the Washington-based fund said the region would contribute about 70 percent of global growth. According to the report, Asia and the Pacific region will be the most dynamic among the major regions of the world in 2023 and China and India will be the most important contributors to this. The IMF report said that these two largest and emerging economies of the region will contribute almost half of the global growth this year. The rest of Asia and the Pacific will account for a fifth of the remaining half.

“Asia's dynamism will be mainly driven by recovery in China and resilient growth in India,” the report said. However, growth in the rest of Asia is expected to be lower in 2023, in line with other regions. The IMF said that 2023 appears to be a challenging year for the global economy as global growth decelerates. This is due to monetary policy tightening (through frequent increases in interest rates) and Russia's war in Ukraine affecting economic activity.

In addition, persistent inflationary pressures and recent financial sector problems in the US and Europe are further complicating an already complex economic landscape, the report said. Meanwhile, Silicon Valley Bank, one of the world's most prominent lenders to technology startups, collapsed on March 10. Last Monday, First Republic Bank was also seized by the regulators. These recent developments are adding further uncertainty to the global economy.

The collapse of some US regional banks, including Silicon Valley Bank, has stirred up the global banking industry. There has been apprehension about the impact of its transition on the economies. Growth in the Asia Pacific region has also received a fresh impetus from China's reopening of its economy following the extension of COVID-related restrictions. However, the IMF cautioned that this dynamic outlook does not mean that the region's policymakers can afford to become complacent. The IMF said monetary policy should remain tight until inflation is within the target range. The exceptions to inflation are China and Japan, where production is below capacity and inflation has been low.