Chetan Ahya discusses China's economic challenges in terms of debt, demographics, and deflation. He compares it to Japan's 'Lost Decade' and emphasizes the importance of decisive actions to avoid a similar outcome.

While there is some skepticism that Asia’s growth will outperform this year, there are a few promising indicators that investors may want to keep in mind.----- Transcript -----Welcome to Thoughts on the Market. I'm Chetan Ahya, Chief Asia Economist at Morgan Stanley. Along with my colleagues, bringing you a variety of perspectives, today I'll be discussing how Asia's growth is bouncing back. It's Wednesday, March 8th at 9 a.m. in Hong Kong. The last time I came on this podcast, I spoke about why we expect Asia's growth to outperform in 2023. To briefly recap, we expect Asia's growth to be five percentage points higher than the developed markets by the end of the year. One of the key debates we have with investors is precisely about how the growth outlook is tracking relative to our bullish forecasts. Investors are generally skeptical on two counts. First, for China, investors believe that consumption growth will not be sustained after the initial reopening boost. Second, for region excluding China, investors saw that there was a soft patch in the consumption data for some of the economies, and so they are questioning if this will persist over time and across geographies. For China, we have already seen a sharp rebound in services spending in areas like dining out, domestic travel and hotels. We expect consumption growth to continue to recover towards the pre-COVID strength in a broad-based manner. Crucially, this consumption growth is being supported by the sustainable drivers of job growth and income growth rather than a drawdown in excess savings. Private sector confidence is being revived by the alignment of policies towards a pro-growth stance. This shift in stance also means that policymakers will likely be taking quick and concerted policy action to address any remaining or fresh impediments to growth. In other words, this policy stance is likely to persist at least until we get clear signs of a sustainable recovery. Moreover, the property sector, which some investors fear might be a drag on household sentiment, appears to be recovering faster than our expectations. For region excluding China, we focus on the next largest economies in purchasing power parity terms, which is India and Japan. For India, growth indicators did slow post the festive season in October, but have reaccelerated in early 2023. Cyclically strong trailing demand has only lifted capacity utilization, and structurally government policies are still very much geared towards reviving private investment. We see private CapEx cycle unfolding, which will sustain gains in employment and allow consumption growth to stay strong in the coming quarters. For Japan, we see three reasons why growth should improve in 2023. Monetary policy will remain accommodative, private CapEx is now on the mend and Japan will benefit from the full reopening of China this spring, in form of increased tourism and goods exports. Overall, we think we are still on track for our base case narrative of growth acceleration and outperformance. In fact, we see marginal upside risk to our above consensus growth forecasts, which will be driven predominantly by China and its spillover impact to the rest of the region. For China, the upside to growth forecasts stems from the possibility that pro-growth pragmatism may set in motion a much stronger recovery than currently expected. Thanks for listening. If you enjoyed the show, please leave us a review on Apple Podcasts and share Thoughts on the Market with a friend or a colleague today.

Chetan Ahya, Morgan Stanley's Chief Asia Economist, and a panel discuss Japan's economic boom, with growing GDP, corporate vibrancy, and sustainable trends. Topics include rising nominal GDP growth, equity market highs, and a stronger equilibrium supporting capex trends. They also touch on factors affecting private capex, future prospects, and insights on corporate governance reform in Japan's equity market.

Chetan Ahya, Chief Asia Economist at Morgan Stanley, examines the impact of the US elections on Asian markets. He discusses how higher tariffs, financial conditions, and US growth outcomes could affect Asia, especially focusing on the growth downside from tariffs. The podcast explores the potential consequences of different election outcomes for China and the broader region, emphasizing the importance of tariffs on various economic factors in Asia's growth.

Experts analyze the state of inflation globally and the impact of the US election on the economy. US growth remains strong with hints of sustained inflation. Europe shows signs of recovery amidst lower energy prices. China faces debt deflation risks while Japan prepares for policy rate changes. Discussion on Fed timing risks, election effects, China's policies, Europe and Japan's economic outlook, and risks in US and China forecasts.