east asia & pacific outlook, jan 2014

19
Ekaterine Vashakmadze World Bank January 2013 Global Economic Prospects January 2014 East Asia & Pacific Region www.worldbank.org/globaloutlook

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Page 1: East Asia & Pacific Outlook, Jan 2014

Ekaterine VashakmadzeWorld Bank

January 2013

Global Economic Prospects January 2014

East Asia & Pacific Region

www.worldbank.org/globaloutlook

Page 2: East Asia & Pacific Outlook, Jan 2014

2013 marked another year of weakening growth in East Asia and the Pacific region with growth moderating to 7.2% from 7.4% in

2012.

Page 3: East Asia & Pacific Outlook, Jan 2014

2013 marked another year of weakening growth in East Asia and the Pacific region with growth moderating to 7.2% from 7.4% in

2012.

Page 4: East Asia & Pacific Outlook, Jan 2014

2013 marked another year of weakening growth in East Asia and the Pacific region with growth moderating to 7.2% from 7.4% in

2012.

Page 5: East Asia & Pacific Outlook, Jan 2014

Growth in China was unchanged from the 7.7% recorded in 2012.

A one percentage point slowdown in growth in the rest of the region reflects a

moderation of economic activity in Indonesia, Malaysia, and Thailand.

Page 6: East Asia & Pacific Outlook, Jan 2014

Growth in China was unchanged from the 7.7% recorded in 2012.

A one percentage point slowdown in growth in the rest of the region reflects a

moderation of economic activity in Indonesia, Malaysia, and Thailand.

Page 7: East Asia & Pacific Outlook, Jan 2014

Source: World Bank, IMF IFS.

Figure 1. Growth in 2013 moderated reflecting a sharp slowdown in the first quarter in a number of large Middle Income countries of the region partly reflecting policy tightening aimed at unwinding

imbalances which resulted from loose policies implemented during 2007 and 2012 2

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ChinaIndonesiaDeveloping countries excl. China

Quarterly GDP, percent change, saar

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China MalaysiaThailand IndonesiaVietnam (RHS)

Real credit growth, % change, year-over-year

Page 8: East Asia & Pacific Outlook, Jan 2014

Source: World Bank, IMF, IFS, Datastream.

Figure 2. The impact of domestic adjustment was also exacerbated by a tightening of international financing conditions in the second quarter of 2013

May '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '1350

100

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Developing countries IndonesiaVietnam China

Sovereign Bond Interest Rate Spreads, basis points over US Treasuries

Page 9: East Asia & Pacific Outlook, Jan 2014

Jul '12 Oct '12 Jan '13 Apr '13 Jul '13 Oct '13-60

-40

-20

0

20

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60

China ThailandEast Asia excluding China P.R.

Import volume, % change, 3m/3m, saar

Source: World Bank, Datstream.

Figure 3. Imports contracted sharply reflecting policy tightening and contributed to stronger net-exports

Page 10: East Asia & Pacific Outlook, Jan 2014

Source: World Bank, Markit Economics, Datstream.

Figure 4. Business sentiment started to improve in the second half of 2013, but remains precarious

Jan '12 May '12 Sep '12 Jan '13 May '13 Sep '1340

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Vietnam South Korea IndonesiaJapan China

Diffusion index, greater than 50 indicates expan-sion

Page 11: East Asia & Pacific Outlook, Jan 2014

May '12 Aug '12 Nov '12 Feb '13 May '13 Aug '13 Nov '13-50

-30

-10

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China IndonesiaEast Asia (excl. China) Philippines

Export volume, % change, 3m/3m, saar

Source: World Bank, Datstream.

Figure 5. Regional exports rebounded following a six month period of contraction

Page 12: East Asia & Pacific Outlook, Jan 2014

Source: World Bank, Datstream.

Figure 6. Pressures on the regional currencies have considerably lessened from May-September tightening episode, but remain present particularly in Indonesia reflecting on-going adjustment

to external balance pressures and in Thailand related to on-going political tensions .

May '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '1380

85

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Nominal Effective Exchange Rates (April 1, 2013=100)

Thailand

Malaysia

Indone-sia

China

Page 13: East Asia & Pacific Outlook, Jan 2014

Overall growth in the region is expected to stay flat at around 7.2% in 2014 and ease insignificantly to 7.1% in 2015 and

2016.

Page 14: East Asia & Pacific Outlook, Jan 2014

Overall growth in the region is expected to stay flat at around 7.2% in 2014 and ease insignificantly to 7.1% in 2015 and

2016.

Page 15: East Asia & Pacific Outlook, Jan 2014

Overall growth in the region is expected to stay flat at around 7.2% in 2014 and ease insignificantly to 7.1% in 2015 and

2016.

Page 16: East Asia & Pacific Outlook, Jan 2014

The region… although of a relatively low probability, the outlook would be sensitive to the risks of either an abrupt tightening of

global financing conditions, or a rapid decline in China’s investment rates.

Page 17: East Asia & Pacific Outlook, Jan 2014

The region… although of a relatively low probability, the outlook would be sensitive to the risks of either an abrupt tightening of

global financing conditions, or a rapid decline in China’s investment rates.

Major tail-risks have subsided but, have not been eliminated and include protracted recovery in the Euro Area and fiscal

policy uncertainty in the United States.

Page 18: East Asia & Pacific Outlook, Jan 2014

The region… although of a relatively low probability, the outlook would be sensitive to the risks of either an abrupt tightening of

global financing conditions, or a rapid decline in China’s investment rates.

Major tail-risks have subsided but, have not been eliminated and include protracted recovery in the Euro Area and fiscal

policy uncertainty in the United States.

In addition, although currently contained, an escalation of country-level (Thailand, for example) as well as bilateral and

geo-political tensions may undermine regional growth prospects.

Page 19: East Asia & Pacific Outlook, Jan 2014

Ekaterine VashakmadzeWorld Bank

January 2013

Global Economic Prospects January 2014

East Asia & Pacific Region

www.worldbank.org/globaloutlook