Asia's economy is expected to grow 5% faster than developed countries by the end of 2023, according to Morgan Stanley economists. This growth will be driven by China's easing of Covid-19 restrictions, strong domestic demand, and interest rates staying in less-restrictive territory. The recent banking stress in the US and Europe further strengthens the case for Asia's outperformance, the economists noted. The lending standards in the US and Europe will tighten, and it will spill over to Asia in the form of the external demand recovery being constrained. However, Asia will still be able to generate sufficient domestic demand to allow growth differentials to shift in favour of Asia. This 5% higher growth rate would be the strongest since 2017, according to Morgan Stanley.
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