CHENNAI: Morgan Stanley Research said that the Indian economic indicators have started showing re-acceleration after a slowdown post-festive season in October 2022.
The slowdown in India's growth indices during the October holiday season has worried investors. But, it adds that beginning in early 2023, growth indicators have begun to show symptoms of re-acceleration.
Morgan Stanley claims that strong family balance sheets and an uptick in private and public expenditure will support job gains and keep consumer growth robust in the upcoming quarters.
Strong trailing demand has already increased capacity utilisation, and government policies are still very much focused on restoring private investment, according to the research.
The Indian budget for FY24 was yet another positive step towards attracting private investment. China's economy would expand by 5.7% this year, with a significant portion of the GDP recovery being supported by a rebound in consumer spending, it said. After expanding by 2% in 2022, consumption is predicted to increase by 8.3% in 2023.
"Investors are still wary of a consumption-led recovery, though, given that in China, it hasn't historically been the main force behind a resurgence in GDP. Additionally, they worry that consumers may decide to save their extra money rather than spend it because it was obtained through unrestricted spending rather than government transfers "said Morgan Stanley.
Japan will gain from the resurgence of Chinese growth through an increase in visitor numbers and exports of goods. According to Morgan Stanley, 30% of Chinese tourists visited Japan in 2019 and roughly 19% of its exports went to China.
High-frequency data indicates that Chinese tourist arrivals to Japan have improved recently, potentially reaching 18% of pre-Covid levels as of the week of February 21.
Similar to how China would gain from its recovery, the Korean economy, which shrank sequentially in 4Q22 with widespread weakness across all spending components, is anticipated to do well.
Morgan Stanley predicts a slight comeback in Korean exports if China's economy strengthens.
Indonesia's demand indicators are fairly solid, and despite a slight decline in commodity prices, export prices are still 30–200% higher than they were prior to Covid.
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Economic Growth India Likely Slowed Further in Oct-Dec to 4.6-pc