"Government policies are still very much geared towards reviving private investment, which we expect will continue to unfold as strong trailing demand has already lifted capacity utilisation," the report notes.
The Indian budget for FY24 was another step in the right direction to crowd in private investment.
As regards China's growth, Morgan Stanley expects its economy to grow by 5.7 per cent this year, with much of the growth recovery underpinned by a revival in consumer spending.
Consumption is expected to grow by 8.3 per cent in 2023 after two per cent growth in 2022.
"However, investors are still somewhat sceptical about a consumption-led rebound as that has not typically been the key driver to a growth recovery in China. Moreover, they are also concerned that the consumers might choose to hoard their excess savings rather than spend it, given that the excess saving was accumulated through unspent consumption rather than through government transfers," Morgan Stanley said.
The Chinese growth recovery will benefit Japan in the form of increased tourist arrivals and goods export. In 2019, 30 per cent of Japan tourists arrived from China and about 19 per cent of its exports were to China, Morgan Stanley said.
In recent weeks, high-frequency data suggests improvement in Chinese tourist arrivals into Japan has picked up, having likely raised to 18 per cent of its pre-Covid levels as of the week of February 21, the report notes.
