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Consumer resilience unlikely to last

Most countries in the region have now reported GDP figures for the third quarter, and growth was generally faster than we (and the consensus) had expected. One factor behind this resilience was the strength of private consumption, which held up well in nearly every country (Singapore and Malaysia were the exceptions). However, the headwinds facing Asian consumers are increasing and we don’t expect this recent strength to last. Reopening from the pandemic has provided a boost to demand in many places, but with daily life broadly back to normal, this support to growth is now fading.  Consumer spending will also be hit by the impact of recent aggressive interest rate hikes and elevated inflation. With private consumption set to weaken and exports being hit by the slowdown in global demand, economic growth looks set to slow. Our GDP growth forecasts for next year are well below consensus in most economies.

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