The economic outlook for Asia in 2022 looks brighter, as the pace of vaccination across the region reaches a critical threshold that will allow further easing of restrictions. Next year is the Year of the Tiger, and ANZ Research expects some Asian economies to start to roar as the recovery powers on.
We've already seen domestic demand start to pick up. ANZ Research’s forecast is for Asia ex-China and India to see a continued recovery in gross domestic product and growth through 2022.
ANZ Research expects a slight moderation in growth rates through the year, although more of a moderation to trend than anything material. That will allow central banks in the region to continue their policy normalisation.
ANZ Research expects south-east Asian economies, badly hit by the pandemic in 2021, to see a stronger recovery in 2022, due to lower base effects from the pandemic. As the economy starts to normalise and activity returns to normal levels, the export sector will benefit.
That's one of the key reasons why Asia is well placed to weather the anticipated US Federal Reserve tightening cycle. ANZ Research expects the Fed to hike twice in the second half of 2022, but such a move should not place any undue stress on Asian financial markets.
There are two major risks to the outlook in 2022. One is the emergence of further COVID-19 variants that could derail the recovery. This remains an unknown, but given governments are now much better placed to handle such activity, ANZ Research hopes this will be less of an issue in 2022.
The other major risk is around inflation. Concerns around high inflation around the world are rising. In Asia, generally speaking, inflation remains contained, and for now ANZ Research does not expect it will reach levels of concern for policymakers.
After an unprecedented 2021, next year will be a critical one for global markets. The post-COVID landscape is one of rapid technological change, a transformational shakeup of global trading orthodoxy and an increasing focus on sustainable business.
At ANZ Institutional, we aim to help our customers put themselves in the best possible position to take advantage of these forces. Our subject-matter experts provide thought leadership in a range of complex areas from across more than 30 markets.
As 2022 looms, we are asking our experts about the factors they see shaping markets and industry – and the opportunities and challenges within. We’ll be sharing the responses with you over the coming weeks.
Khoon Goh is Head of Asia Research at ANZ
This publication is published by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (“ANZBGL”) in Australia. This publication is intended as thought-leadership material. It is not published with the intention of providing any direct or indirect recommendations relating to any financial product, asset class or trading strategy. The information in this publication is not intended to influence any person to make a decision in relation to a financial product or class of financial products. It is general in nature and does not take account of the circumstances of any individual or class of individuals. Nothing in this publication constitutes a recommendation, solicitation or offer by ANZBGL or its branches or subsidiaries (collectively “ANZ”) to you to acquire a product or service, or an offer by ANZ to provide you with other products or services. All information contained in this publication is based on information available at the time of publication. While this publication has been prepared in good faith, no representation, warranty, assurance or undertaking is or will be made, and no responsibility or liability is or will be accepted by ANZ in relation to the accuracy or completeness of this publication or the use of information contained in this publication. ANZ does not provide any financial, investment, legal or taxation advice in connection with this publication.