The primary driver of global economic growth

The Asia-Pacific region has recently overcome numerous challenges, demonstrating its dynamism and adaptability in the face of global difficulties and fluctuations. With expectations to continue a positive recovery in the second half of 2024, Asia-Pacific is asserting its role as the primary driver of global economic growth.

Production line at an automobile assembly plant in Anhui Province, China

As the global economic landscape faces turbulent times with many countries trapped in stagnation, high inflation, and public debt, Asia-Pacific is receiving positive signals. According to the International Monetary Fund (IMF), the Asia-Pacific economy grew beyond expectations in the first half of 2024 and is forecast to reach 4.6% growth in 2024 and 4.4% in 2025. The region’s two largest economies, China and India, are maintaining stable growth, while other emerging markets in the area are continuing to develop in a robust manner.

Sharing a similar view, the Asian Development Bank (ADB) has also raised its growth forecast for developing economies in Asia-Pacific, driven by increased exports and domestic demand.

This remarkable acceleration stems from multiple factors. Krishna Srinivasan, the IMF’s Director of the Asia and Pacific Department, emphasised that a massive labour force, deep integration into global supply chains, and high productivity growth are three key elements in opening the door to economic development, positioning Asia-Pacific as the main engine of the world economy, contributing up to 60% of global growth.

Additionally, the rising demand for electronic products, especially semiconductors for high-tech applications and artificial intelligence, is boosting export activity in several economies within the region. Significantly eased inflation is also aiding businesses in expanding production.

Furthermore, Asia-Pacific’s development contrasts with the rising trends of anti-globalisation and protectionism worldwide. Its progress serves as evidence of achieving shared prosperity through integration and liberalisation in trade and investment.

Asia-Pacific has established a dense network of high-quality comprehensive free trade agreements, notably including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These agreements have built a solid foundation for enhancing connectivity among economies, supporting integration, and driving growth across the region.

This strong economic growth is a major factor in Asia-Pacific’s increasing appeal, with many world powers prioritising this promising region in their foreign policies. In a recent speech at the Eastern Economic Forum (EEF), Russian Foreign Minister Sergei Lavrov highlighted that a multipolar world is emerging, with Asia-Pacific playing a crucial role in this process.

Alongside these positive signs, the Asia-Pacific economy also faces numerous challenges. Rising protectionism, weakening global demand, and the negative effects of climate change and extreme weather on commodity prices, food security, and energy stability are some of the top risks.

Moreover, geopolitical tensions and trade wars could disrupt supply chains and lead to fluctuations in commodity prices globally, including in the Asia-Pacific region. In this context, the IMF recommends that countries in the region adopt flexible monetary and fiscal policies while implementing risk mitigation measures and addressing long-term challenges such as climate change and an aging population.

With its rapid and stable development, the Asia-Pacific region has become a pillar of the global economy and a leader in international cooperation. Analysts believe that, with its solid foundation and vast development potential, the Asia-Pacific economy will overcome current challenges and continue to maintain its position as the primary driver of global economic growth.

NDO