The lagged impact of tightening domestic policy and global financial conditions, and the aftermath of crises and natural disasters in several economies, are expected to temper growth in 2024. Unexpected resilience in private consumption and investment, and robust growth in the services sector in India, underlie an upward revision to growth in 2023. Growth in South Asia is expected to slow marginally in 2023, to 5.9 percent, and more significantly in 2024, to 5.1 percent. Downside risks to the outlook include tighter-than-expected global financial conditions stubbornly high inflation protracted weakness in China’s property sector geopolitical tensions and, particularly for smaller economies, natural disasters, including climate-change-related extreme weather events. In 2024, growth in EAP is projected to ease to 4.6 percent as the effects of China’s reopening fade. Regional trade growth will remain subdued amid weak global demand and domestic services-led growth in China. Growth in the region excluding China is set to slow to 4.8 percent in 2023 from 5.8 percent in 2022, as the boost from earlier reopening fades in several large economies. Projected growth in China this year has been revised upward following a faster-than-expected reopening of the economy, which is bolstering near-term consumer spending, particularly on services. Growth in the East Asia and Pacific (EAP) region is projected to strengthen to 5.5 percent in 2023 from 3.5 percent in 2022, as a recovery in China offsets slowing activity in most other regional economies.
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