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The latest indicators point to a weaker recovery in mainland China, with CBRE expecting full-year growth for this market to reach 5.2% on the assumption that the government introduces an array of stimulus to boost domestic consumption and fixed asset investment in H2 2023.
CBRE has adjusted its 2023 Asia Pacific GDP growth forecast up to 4.1%, partly because the timing of a U.S. recession has been further pushed back to Q4 2023 – Q1 2024. Export-oriented economies have been affected by weak global demand, while mature markets in Asia Pacific (ex Hong Kong SAR) are expected to grow at around 1% or less.
Mid-year review
Asia Pacific GDP is forecasted to grow by 3.6% in 2023, maintaining the pace set in 2022. Performance across the region will be polarised, with growth in mainland China set to pick up to 4.9% (revised up to 5.7% in April), but expansion in the region’s mature economies including Australia, Japan and Singapore forecasted to fall to sub-2.0%.
Forecast made in January 2023
Mainland China-Led Recovery
The latest indicators point to a weaker recovery in mainland China, with CBRE expecting full-year growth for this market to reach 5.2% on the assumption that the government introduces an array of stimulus to boost domestic consumption and fixed asset investment in H2 2023.
CBRE has adjusted its 2023 Asia Pacific GDP growth forecast up to 4.1%, partly because the timing of a U.S. recession has been further pushed back to Q4 2023 – Q1 2024. Export-oriented economies have been affected by weak global demand, while mature markets in Asia Pacific (ex Hong Kong SAR) are expected to grow at around 1% or less.
Mid-year review
Asia Pacific GDP is forecasted to grow by 3.6% in 2023, maintaining the pace set in 2022. Performance across the region will be polarised, with growth in mainland China set to pick up to 4.9% (revised up to 5.7% in April), but expansion in the region’s mature economies including Australia, Japan and Singapore forecasted to fall to sub-2.0%.
Forecast made in January 2023
Mainland China-led recovery
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With the U.S. interest rate hike cycle having been prolonged due to higher levels of core inflation and the tight labour market, the Fed funds rate has already exceeded our expectations, reaching 5.25-5.5%, and is likely to remain at this level for longer.
CBRE’s forecast that Asian countries would keep future interest rate increases within a magnitude of 100 bps has proven correct, with several markets pausing rate hikes in H1 2023. Australia is likely to be the only major market to face the possibility of further rate hikes in H2 2023. The outlook for Asia Pacific interest rates is now stable as the current monetary tightening cycle nears an end.
Mid-year review
The Fed Funds Rate is projected to peak at around 5.0% in mid-2023, ending the steepest rate hike cycle in history. Further interest hikes in major Asia Pacific markets are not expected to exceed a total of 100 bps in 2023, with Japan and mainland China the exceptions in keeping rates low.
Forecast made in January 2023
Peak Interest Rates
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With the U.S. interest rate hike cycle having been prolonged due to higher levels of core inflation and the tight labour market, the Fed funds rate has already exceeded our expectations, reaching 5.25-5.5%, and is likely to remain at this level for longer.
CBRE’s forecast that Asian countries would keep future interest rate increases within a magnitude of 100 bps has proven correct, with several markets pausing rate hikes in H1 2023. Australia is likely to be the only major market to face the possibility of further rate hikes in H2 2023. The outlook for Asia Pacific interest rates is now stable as the current monetary tightening cycle nears an end.
Mid-year review
The Fed Funds Rate is projected to peak at around 5.0% in mid-2023, ending the steepest rate hike cycle in history. Further interest hikes in major Asia Pacific markets are not expected to exceed a total of 100 bps in 2023, with Japan and mainland China the exceptions in keeping rates low.
Forecast made in January 2023
Peak interest rates
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Inflation in most Asian economies eased significantly in H1 2023. Japan retained its ultra loose monetary policy despite June core CPI staying above the target rate at 3.3% y-o-y. CPI in mainland China was flat y-o-y in June and PPI remained negative, highlighting tepid demand and the need for additional policy support.
Mid-year review
Inflationary pressure will continue to decline on the back of weaker global demand, lower energy and food prices and improving supply chain efficiency. Australia, New Zealand and India are the only major Asia Pacific economies forecasted to see inflation reach 5% or more in 2023, with that in other markets expected to pull back to under 3.5%.
Forecast made in January 2023
Weaker Inflation
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Inflation in most Asian economies eased significantly in H1 2023. Japan retained its ultra loose monetary policy despite June core CPI staying above the target rate at 3.3% y-o-y. CPI in mainland China was flat y-o-y in June and PPI remained negative, highlighting tepid demand and the need for additional policy support.
Mid-year review
Inflationary pressure will continue to decline on the back of weaker global demand, lower energy and food prices and improving supply chain efficiency. Australia, New Zealand and India are the only major Asia Pacific economies forecasted to see inflation reach 5% or more in 2023, with that in other markets expected to pull back to under 3.5%.
Forecast made in January 2023
Weaker inflation
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