Asia and the Pacific is a relative bright spot amid the more somber context of the global economy's rocky recovery.

As the Chart of the Week shows, the region will contribute about 70 percent of global growth this year—a much greater share than in recent years.

Our latest Regional Economic Outlook describes the resilience of the world’s most dynamic region and important challenges facing its policymakers. Growth in Asia and the Pacific is forecast to accelerate to 4.6 percent this year from 3.8 percent last year.

The main development has been the reopening of China, where surging consumption is boosting growth across the region despite weaker demand from the rest of the world.

Risks to the outlook include spillovers from greater-than-expected US monetary policy tightening and supply chain disruptions associated with geoeconomic fragmentation.

But the region also faces important challenges. In the short term, monetary and fiscal policies will need to remain tight to bring inflation durably back to central bank targets and stabilize public debt.

An integrated policy response using all available tools will be needed to manage global shocks. While Asia’s financial systems haven’t seen major impacts following recent banking turmoil in the United States and Europe, they need to be carefully monitored given high leverage among households and corporates.

In the longer term, the Chinese economy that has been the primary engine of regional and global growth for decades is expected to slow considerably in the face of unfavorable demographics and a productivity slowdown.

The region should prioritize structural reforms to boost long-term growth, including through innovation and digitalization, while accelerating the green energy transition.

Thomas Helbling is a Swiss national and Deputy Director in the Asia Pacific Department of the International Monetary Fund. In this function, he oversees the department’s work on China, Korea, and Mongolia, and on regional issues. Previously, he was the mission chief for Mexico in the Western Hemisphere Department and mission chief for Indonesia and the Philippines in the Asia Pacific Department. He has worked on a wide range of issues and countries since joining the IMF in 1994. From 2012-15, he was the chief of the World Economic Studies Division, co-directing the work on the IMF’s World Economic Outlook. From 2016-19, he was the chief of the Australia-New Zealand Division and mission chief for both countries. His recent research has focused on commodity price dynamics and global economic conditions; global oil markets; international economic policy issues; international business cycle linkages; and economic history. Mr. Helbling has a doctorate in international economics from the Graduate Institute of International Studies in Geneva, Switzerland.

Shanaka Jayanath (Jay) Peiris is the Asia and Pacific Department’s Division Chief of Regional Studies and Mission Chief for the Philippines, leading the flagship publication of the Regional Economic Outlook. He was previously IMF Mission Chief for Myanmar and Deputy Division Chief covering ASEAN macro financial surveillance. His prior stints include IMF Resident Representative in the Philippines, Mission Chief to Tonga, and extensive surveillance and program experience in Asia and Africa. He joined the IMF Economist Program in 2001 after completing his PhD in Economics at Oxford University as a British Chevening Scholar. He has published academic journal papers on a wide range of topics including inclusive growth, monetary policy and inflation, bond markets, banking and finance, macroeconomic models for emerging markets and co-edited books on ASEAN and sub-Saharan Africa.

Krishna Srinivasan is the Director of the Asia and Pacific Department (APD). In this capacity, he oversees the institution’s work on all countries in the Asia-Pacific region. He was previously a Deputy Director in APD, overseeing the work on several systemically important countries, including China and Korea. Prior to that, Krishna was a Deputy Director in the Western Hemisphere Department (WHD), where he oversaw the institution’s work on several countries in the Americas, including Brazil, Canada, Mexico, Peru, Ecuador and the island economies of the Caribbean, the department’s research activities, and its flagship product, Regional Economic Outlook (REO) for Latin America and the Caribbean. He is a co-editor of two recent books: Brazil—Boom, Bust and the Road to Recovery; and Unleashing Growth and Strengthening Resilience in the Caribbean. Before joining WHD, Krishna was the IMF’s mission chief for the United Kingdom and Israel, when he was a staff member of the European Department, and before that in the Research Department, where he led the IMF’s work on the G-20 in the context of the global financial crisis. In the context of this work, he was co-editor of an IMF book Global Rebalancing: A Roadmap for Economic Recovery. Krishna has been with the IMF since 1994 and has served in several departments across the institution. He secured his PhD in International Finance from Indiana University and a Master’s from the Delhi School of Economics, India, and has published several papers both at the IMF and in leading academic journals.

This article first appeared at the IMF Blog, a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day. The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board. Reprinted with permission