India's growth is likely to remain strong at 5.8 per cent, albeit slightly lower than the estimated 6.4 per cent in 2022, as higher interest rates and a global slowdown weigh on investment and exports, as per United Nations (UN) World Economic Situation and Prospects 2023 report.
The report stated the prospects are more challenging for other economies in the region. Bangladesh, Pakistan and Sri Lanka sought financial assistance from the International Monetary Fund (IMF) in 2022.
Talking about Western Asia, the UN report asserted that oil-producing countries have emerged from the economic slump, benefitting from high prices and rising oil output as well as the recovery of the tourism sector.
Recovery in non-oil-producing countries, by contrast, has remained weak given tightening access to international finance and severe fiscal constraints.
"Average growth is projected to slow from an estimated 6.4 per cent in 2022 to 3.5 per cent in 2023, given worsening external conditions," according to the report.
In Africa, economic growth is projected to remain subdued with a volatile and uncertain global environment compounding domestic challenges.
"The region has been hit by multiple shocks, including weaker demand from key trading partners (especially China and Europe), a sharp increase in energy and food prices, rapidly rising borrowing costs and adverse weather events," it mentioned.
As debt-servicing burdens mount, a growing number of governments are seeking bilateral and multilateral support.
Meanwhile, United Nations also predicted a worsening outlook in most developing regions amid the fear of a possible recession.
The report stated that growth in China is projected to moderately improve in 2023 after the weaker-than-expected performance in 2022.
Notably, amid recurring Covid‑19- related lockdowns and prolonged stress in the real estate market, the economy expanded by only 3 per cent in 2022.
With the government abandoning its zero-Covid‑19 policy in late 2022 and easing monetary and fiscal policies, economic growth is forecast to accelerate to 4.8 per cent in 2023.
It added, "But the reopening of the economy is expected to be bumpy. Growth will likely remain well below the pre-pandemic rate of 6 to 6.5 per cent."
As per the report, economic recovery in East Asia remains fragile, although average growth is stronger than in other regions. In 2023, GDP growth in East Asia is forecast to reach 4.4 per cent, compared to 3.2 per cent in 2022, mainly reflecting the modest recovery of growth in China.
Yet many economies in the region (other than China) are losing steam amid fading pent-up demand, rising living costs and weakening export demand from the United States and Europe.
This coincides with a tightening of global financial conditions, and countries adopting contractionary monetary and fiscal policies to curb inflationary pressures.
It added that although the expected recovery of China’s economy will support growth across the region, any surge in Covid‑19 infections may temporarily create slowdowns.
For South Asia, the UN report mentioned that the economic outlook has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities. Average GDP growth is projected to moderate from 5.6 per cent in 2022 to 4.8 per cent in 2023.