Asia Views: 2023 Outlook: Inflation Peaks and Growth Troughs

The Asia Views: 2023 Outlook report states that the year 2022 was a tumultuous one in Asian (and global) financial markets. A surge in inflation drove an abrupt repricing of global rates, with the US 2y Treasury yield up roughly 400bp over the past year. Most of the Asia-Pacific region reopened from Covid, but China doubled down on containing the virus, suppressing economic activity. Russia's invasion of Ukraine pushed global commodity prices higher. Xi Jinping consolidated power at China's 20th Party Congress, and US-China tensions escalated. These events proved challenging for regional asset prices, with bonds, equities, and regional currencies all taking a beating. Despite the headwinds and a slowdown in global growth, much of the region (excluding China/HK) still posted above-trend growth, with particularly strong activity in India and Southeast Asia.