eBook Categories Economics Asian Development Outlook 2008
Asian Development Outlook 2008 |
| Ebook - Economics | |
| Monday, 01 December 2008 | |
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Outlook for 2008 and 2009 ❏ A global slowdown is now under way. A coincident slowing of growth is expected in the economies of the US, European Union, and Japan. The ADO baseline forecasts have been revised down significantly over the last few months and, as new data are released, analysts in the public and private sectors continue to cut their growth forecasts. ❏ A credit crisis has gripped the US. Success of the Federal Reserve and the Treasury in coping with economic and financial market stresses is yet to be seen. The depth and duration of the US slowdown will have knock-on effects elsewhere in the global economy. The consensus view is that after a difficult first half of 2008, growth in the US should pick up in response to fiscal stimulus and aggressive interest rate cuts. It is unclear whether normal monetary transmission mechanisms will be effective in markets where confidence in counterparties appears to have been seriously weakened. ❏ Though the prospect of a recession in either the eurozone or Japan looks less likely than in the US, growth is expected to decelerate sharply there. Appreciation of both euro and yen real exchange rates is likely to dent export growth, and in both economies, consumer confidence is also ebbing. ❏ ❏ Developing Asia remains tied to global activity through traditional trade channels and, increasingly, through its closer integration in international financial markets. Nevertheless, in an unsteady global environment, favorable policy conditions and the productivity growth associated with the region's modernization and structural transformation will continue to sustain strong growth. ❏ During 2008, both the PRC and India are expected to slow. The PRC is expected to grow by a solid 10% in 2008 and India by a still-healthy 8%. In the past 18 months, both countries have tightened monetary policy, raising interest rates and placing higher reserve requirements on banks. The PRC has also taken a variety of steps to cool a booming export sector, including withdrawal of export subsidies and the imposition of new taxes. India's real exchange rate has appreciated, whereas the yuan moved less. In 2008, slower growth of global demand will likely have a more pronounced effect on the PRC, which is considerably more open to trade than India. ❏ Growth in East Asia is expected to decelerate in 2008 to 8.1%. Fixed investment growth is expected to slow somewhat as a result of tighter monetary policy in the PRC. Rebalancing growth there toward domestic consumption and away from exports and investment in industry will depend on the success of a wide range of reforms. Hong Kong, China; Mongolia; and Taipei,China will also slow, as a result both of the deterioration in the global economy and of their links with the PRC. ❏ Southeast Asia will slow to 5.7%, its export prospects damped by the slowdown in the global economy. In addition, efforts to prevent inflation from getting out of hand will moderate growth in Viet Nam from the fast pace of recent years. Only Thailand is expected to record higher growth after a return to normalcy in politics. ❏ South Asia is expected to slow in 2008, chiefly on the moderation of growth in the Indian economy. Bangladesh, Pakistan, and Sri Lanka will be affected by the growth slowdown in major markets as garment exports are expected to register declines, and may suffer terms of trade losses. ❏ In Central Asia, growth is expected to decelerate sharply to 7.5% in 2008 from double-digit rates in recent years. This is mainly due to a weaker expansion in Kazakhstan, the largest regional economy, where a sudden halt in capital inflows to domestic banks triggered a sharp reduction in lending and a downturn in the non-oil economy. Growth in a number of the region's non-oil countries is slowing, in part due to efforts to cool inflation. ❏ Growth in the Pacific Islands is expected to pick up largely because Papua New Guinea, the biggest economy in the subregion, is benefiting from high global commodity prices and an associated jump in government revenues. Fiji Islands is forecast to grow slightly after contracting in 2007. Timor-Leste is expected to maintain moderate growth, funded by oil revenues. Growth in many of the smaller Pacific economies is forecast to slow in 2008, and two of them are likely to experience economic contractions. Inflation in developing Asia is expected to accelerate and could hit a decade-long regional high. ❏ Inflation will be highest in Central Asia where it will remain in double digits. As the PRC's inflation rate shifts up, so too will that of East Asia. In the other subregions, inflation is also expected to edge up over the course of the year. ❏ Developing Asia's current account surplus is expected to narrow, to about 5.3% of GDP, from 6.4% in 2007. The narrowing of the surplus will be mainly attributable to slowing export growth, particularly in East and Southeast Asia. Oil- and mineral-rich Central Asia is expected to post a stronger surplus in 2008 while South Asia's deficit is seen changing only a little. ❏ In 2009, growth in developing Asia is expected to pick up a bit. This projection assumes modest recovery in the global economy beginning later in 2008 and carrying through 2009, an outcome that is far from guaranteed. Though favorable policies and structural conditions should carry growth in the near term, emerging fiscal and inflation stresses have the potential to pull down growth. ❏ Inflation pressures should recede slightly in 2009. The forecast deceleration in inflation is based on an assumption of some moderation in commodity prices through 2009 and monetary policies that lean against inflation pressures. Current account surpluses are expected to narrow further in 2009, and should help rebalancing, and at an aggregate regional level may fall below 5% of GDP. Even if global demand growth recovers, it is likely to be modest, and real exchange rates are expected to appreciate for many Asian economies. Visit Asian Development Outlook 2008 Website Read Asian Development Outlook 2008 online, or you can download full publication in PDF format. FREE. Download Asian Development Outlook 2008 PDF format, 11.6MB, 320Pages. ISSN: 0117-0481 © 2008 Asian Development Bank CONTENTS FORWARD Parts 1 and 3 provide an assessment of recent economic performance for 44 developing economies in Asia, and projections for major macroeconomic indicators for 2008 and 2009. In 2007, developing Asia grew by 8.7%, the fastest recorded rate of growth since 1988. The People's Republic of China (PRC) and India both grew at an exceptionally rapid pace, and several other countries, including the Philippines, enjoyed the fastest growth in decades. But in the latter part of 2007, the global economic outlook began to turn. Problems that germinated in the United States (US) subprime mortgage and housing market began to spread and amplify. A coincident slowing of growth is now under way in the G3 economies (Europe, Japan, and US). There is still considerable dissonance about the extent and duration of the expected slowdown, and the full extent of problems in US and—possibly European—credit markets is yet to be revealed. ...
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The annual Asian Development Outlook provides a comprehensive economic analysis of 44 economies in developing Asia and the Pacific. This 20th anniversary edition examines trends and prospects in Central Asia, East Asia, South Asia, Southeast Asia, and the Pacific.
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