Building Resilience the Pacific Economic Monitor

Global economic growth was 3.2% in 2023, as economic activity showed resilience despite rising interest rates, and is projected to remain at this rate in 2024–2025. This is lower relative to historical performance as continued high borrowing costs, fiscal consolidation, muted productivity growth, lingering impacts of global shocks, and increasing constraints to trade and investment f lows are all seen to limit expansion. Meanwhile, growth in developing Asia was 5.1% in 2023, driven by a resurgence in domestic demand. This is projected to be 5.0% in 2024 and 4.9% in 2025. Sustained expansion in South Asia and Southeast Asia, fueled by robust domestic demand and higher semiconductor and services exports, should offset moderating growth elsewhere in the region, including in the People’s Republic of China (PRC). y After expansion of 3.5% in 2023, the Pacific subregion is projected to grow by 3.3% in 2024 and 4.0% in 2025. Recovery of resource extraction in Papua New Guinea, stable visitor arrivals in most tourism-dependent economies, and stimulus from public infrastructure projects are seen to drive growth. However, this outlook has several downside risks, including labor shortages, reduced fiscal space, continued exposure to disaster risk, and volatility in global commodity prices and supply chains. y The United States (US) economy grew by an annual rate of 1.3% in the first quarter (Q1) of 2024 compared to 3.4% in Q4 2023. The moderation reflected slower growth in consumer and state and local government spending and exports, as well as reduced federal government spending and increased imports. Growth is projected to be 2.0% in 2024 before slowing to 1.7% in 2025. y In the PRC, gross domestic product (GDP) grew by 5.3% (year-on-year) in Q1 2024, slightly faster than the 5.2% growth realized in Q4 2023. Growth in hightech manufacturing drove an expansion of 6.1% in industrial output. However, the continuing downturn in the real estate sector remains a challenge, with serious implications for consumer spending. The PRC economy is forecast to grow by 4.8% in 2024 and 4.5% in 2025. y Japan’s GDP declined by an annual rate of 1.8% in Q1 2024 after no growth in Q4 2023. Private consumption fell for the fourth straight quarter by 0.7%, as rising costs dampened demand. Private investments and net exports were also subdued, but government consumption and public investments increased. The Japanese economy is seen to grow by 0.6% in 2024, rising to 1.0% in 2025. y The Australian economy remained flat in Q1 2024, recording annualized growth of 0.1% after 0.3% in the previous quarter. Household consumption increased during the period, as did government expenditure driven by increased spending on social assistance, energy bill relief payments, and national defense. Accumulation of inventories likewise contributed to growth. Offsetting these developments were declines in total investment, reflecting the winding down of recent mining and government projects, subdued property market activity, and increased merchandise imports. Growth is projected to be 1.4% in 2024, picking up to 2.3% in 2025.

source :

https://www.adb.org/sites/default/files/publication/988006/pem-august-2024.pdf