Asia driving global growth but other regions struggle

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GDP growth in emerging economies looks reasonable in the circumstances, but overall figures mask huge regional disparities


Skyscraper buildings in Asia | Atradius


Emerging market economies (EMEs) will outperform advanced counterparts in terms of GDP growth in 2023 and 2024, even if activity remains subdued by historical standards.

That’s a key message in our latest Economic Outlook. We forecast that EMEs GDP growth will be 3.9% this year overall and 3.8% in 2024. Not great, but not awful in the circumstances.

But the headline figures mask some major regional differences. We predict that China will enjoy GDP growth of 5.1% in 2023, for example, while Brazil’s GDP will stay below 2% and South Africa will barely record any growth at all.

What lies behind our forecasts? In the rest of this article, we will look at the challenges facing seven major emerging economies in 2023 and 2024.


We think that China will enjoy GDP growth of 5.1% in 2023 but that will slip to 4.6% in 2024. The economy still has some momentum from the removal of Covid restrictions earlier this year, but it is slowing. Consumers went on a spending spree during the first quarter of 2023, when the economy reopened, but a large part of this boost disappeared over the second quarter.

The waning of consumer-led growth into next year will highlight some fundamental challenges with the Chinese economy. Investment remains weak with growth largely supported by the state. Housing demand is a notable challenge, with new housing starts and sales at just 45% and 65% of Q2 2021 levels. Exports are subdued due to weak demand from key markets.

The good news is that, unlike many economies, inflation is under control, and China even experienced slight deflation in July (-0.3% year-on-year). The war in Ukraine has had only a limited effect so far, thanks in part to self-sufficiency in coal and staple grains. The result is that consumer-led growth is not being throttled by rocketing prices.


We expect India's economy to grow by 6.0% in 2023 and 6.3% in 2024. Growth was supported by a falling inflation rate in the first two quarters, but the latest figures show a significant leap due to the irregular monsoon season. India’s central bank decided to pause interest rate hikes at 6.5% on the lower inflation figures delivered earlier this year, but a rate cut is unlikely in the near future now that inflation is rising again.

Elsewhere, manufacturing production growth continues to weaken, and we expect fixed investment growth of 8.0% in 2023, down from 10.3% in 2022. Sluggish imports and exports are also a concern. Government debt is likely to reach 84% of GDP on average this year, but should gradually decrease after the most recent budget prioritised fiscal prudence


Brazil’s central bank was one of the first to start a monetary tightening cycle after the pandemic, hiking interest rates from 2% in March 2021 to 13.75% in August 2022, the highest in the region. That was recently eased to 13.25% and we expect more rate cuts through the year as recent inflation figures were lower than expected.

With that in mind, we predict a decrease in GDP growth from 3% in 2022 to 1.7% this year and 1.1% in 2024.

After the election of left leaning president Lula da Silva in early 2023, economic policy is likely to be more state-driven with higher social spending. But government debt is already high - 74% of GDP in 2023 - and new rules that lift tax revenues are expected later this year. Consumer spending may rise a little in 2024 as inflation falls, but growth will be sluggish at best.


Mexico’s close economic ties with the US will impact its growth as the US loses momentum. On top of that, the lack of financial support for businesses during the pandemic is leaving lasting scars in terms of business closures and the loss of high value jobs.

As a result, we forecast a decrease in GDP growth from 3% in 2022 to 2.6% in 2023 and 1.0% in 2024. Core inflation is still high (6.6% in July), so any easing of interest rates that peaked at 11.25% in March is unlikely until at least the last quarter of 2023.


We forecast growth in Russia’s GDP of 2.4% in 2023 and 1.2% in 2024, despite Western sanctions. Russia is still exporting oil, which underpins its economy.

But predictably, much is uncertain in Russia at the moment. In March, the government announced that it would cut oil production by 500,000 barrels per day, but it’s unlikely that this has been fully implemented. At the same time, any recovery in consumer demand may taper off quickly if new mobilisation plans are announced and consumers look to save rather than spend.

After a sharp hike at the start of the war, interest rates were cut several times. But renewed inflationary pressure and a significant fall in the value of the rouble have led to policy rate hikes in July and August. The rate now stands at 12%. Oil and gas continue to bring in large revenues, but government spending has risen to fund the conflict in Ukraine. We expect budget deficits of 2.9% in 2023 and 1.3% in 2024.   


Turkey faces challenges on a number of fronts, including a weak lira, high inflation and the impact of February’s major earthquake in central and southern regions. Exports have also been hit by monetary tightening around the world.

All of this adds up to subdued economic activity, and we predict GDP growth of 2.6% in 2023 against 5.6% in 2022.

Inflation is very high, though July’s figure of 47.8% is considerably lower than last October’s peak of 85.5%. Despite high inflation, there were several interest rate cuts in 2022 and early 2023, bucking the global trend. The central bank has now raised rates to 17.5% in what might be seen as a return to more orthodox economic strategy.

Many economists hope that Turkey has now recognised the pressing need to bring confidence back to markets and get inflation under control.

South Africa

South Africa will struggle to create any meaningful growth in the near term, against a weak global backdrop and serious domestic power outages. Tougher credit conditions and high unemployment will squeeze household spending power. One bright spot is ebbing inflation, which means interest rates may start to decrease during the forecast period.

With all that in mind, we think that growth will slow to 0.2% in 2023, before recovering slightly to 1% next year.

South Africa has a number of longer term challenges to overcome, including power supply constraints, climate threats and soaring government debt.

The takeaway

We think that EMEs GDP will collectively outperform more advanced economies in 2023 and 2024, but growth will be largely driven by Asia. Elsewhere, growth will be anaemic at best as governments struggle with post-pandemic realities and local challenges.

For a more in-depth look at our global and regional forecasts, please download our latest Economic Outlook.



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