impact of the global financial crisis and its implications ... · -5 0 5 10 15 20 jul-08 aug-08...
TRANSCRIPT
Impact of the Global Financial Crisis and Its Implications for the
East Asian Economyby Takatoshi
Kato
Korea International Financial Association First International Conference
October 16, 2009
The downturn in Asia was larger than expected on the basis of historic correlations
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G-2 Asia (excl. China and India)
Asia (excl. China and India)
Asia: 2008Q4 GDP Growth - Actual vs. Predicted1
(Quarter-on-quarter percent change, SAAR)
Sources: Haver Analytics; and IMF, WEO database; and staff estimates.
1 Based on a version of the IMF Global Integrated Monetary and Fiscal model (see N'Diaye, Zhang and Zhang, 2008).
The surprise in actual G-2growth overNov-08 WEO forecast
…would have implied this revision for Asia based on the model.
But the actual revision was much larger.
Figure 1
Bank flows to Asia turned negative as major banks reduced their leverage
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International Claims of Reporting Banks vis-à-vis Asia(Change adjusted for exchange rate changes; in billions of U.S. dollars)
Source: Bank for International Settlements, Locational Banking Statistics , July 2009.
Figure 2
External bond issuance came to a virtual halt in the last quarter of 2008
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Emerging Asia: External Bond Issuance(In billions of U.S. dollars)
Source: IMF, BEL database.
Figure 3
Equity markets and local currencies, with the exception of the yen, recorded large losses
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Japan AustraliaNew Zealand IndiaIndonesia
Sources: IMF, Information Notice System; and IMF staff calculations.
Selected Asia: Nominal Effective Exchange Rates(January 1, 2008=100)
Figure 4
The external shock fed through to domestic demand
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Hon
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Prov
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of C
hina
Indi
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Mal
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Phili
ppin
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Thai
land
Private consumption Gross fixed investment Net exports
Sources: CEIC Data Company Ltd; and IMF staff calculations.
Selected Emerging Asia: Contributions to 2008Q4 GDP Growth(In percentage points; quarter-on-quarter seasonally adjusted)
Figure 5
IP has regained much lost ground and in some cases returned to pre-crisis levels
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Japan Australia-NewZealand
China, India andIndonesia
Other emerging Asia
Peak-to-trough Trough to latest available data
Asia: Industrial Production during 2008-09(Percent change, seasonally adjusted)
Sources: CEIC Data Company Ltd; and IMF staff calculations.
Figure 6
The IP rebound reflects an equally sharp rebound in export volumes
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Japan NIEs China
Peak-to-trough Trough to latest available data
Selected Asia: Volume of Exports during 2008-09(Percent change, seasonally adjusted)
Sources: CEIC Data Company Ltd; and IMF staff calculations.
Figure 7
Domestic demand has also been playing a part in Asia’s rebound
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Japan Australia-New Zealand Emerging Asia 1/
Gross exportsDomestic demandGDP growth
Asia: Contribution to Recovery in Real GDP Growth(In percent, seasonally adjusted, non-annualized)
Source: IMF staff calculations.
1 Excludes China, India, Indonesia and Vietnam due to absence of a cycle and/or non-availability of data.
Figure 8
Global financial conditions have eased, as evidenced by narrowing credit spreads,…
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Investment gradeHigh yield
Asia: Credit Risk - Itraxx Index(In basis points)
Source: Bloomberg LP.
Figure 9
…renewed equity inflows,…
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India ASEAN-5 (excl. Malaysia)Taiwan Province of China KoreaJapan
Selected Asia: Net Equity Inflows(In billions of U.S. dollars)
Source: Bloomberg LP.
Figure 10
…and recovering equity markets
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Emerging Economies: Stock Markets(MSCI Index, 1 Jan 2008=100)
Emerging Asia
Emerging Europe
Emerging Latin America
Figure 11
The current rebound is to a large extent driven by a restocking of global inventories
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New OrdersInventories
United States: Manufacturing Orders and Inventory(Index, SA, 50+ = Econ Expand)
Source: Haver Analytics.
Figure 12
Asia’s fiscal response has been larger than in the average G20 economy
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Industrial Asia NIEs ASEAN-5 China and India G-20
Asia average
Discretionary Fiscal Measures, 20091
(In percent of GDP, PPP GDP weighted)
Source: IMF staff estimates.
1 Defined as fiscal impulse (i.e. change in structural fiscal balances related to measures taken in response to the crisis).
Figure 13
Strong exports reflect partly a gain in market share, as opposed to an increase in demand
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Market share of Korea Exports (percent, LHS)
REER (Jan. 1999=100, inversed, RHS)
Korea's Share in Global Export Markets
Sources: IMF, Direction of Trade, and Information Notice System.
Figure 14
Asia’s dependence on demand from outside the region has not changed markedly
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SGP
MYS
TWN
THA
PHL
IDN
KOR
CHN
JPN
USA
Asian external demand
Non-Asian external demand
Sources: AIO 2000, and IMF staff estimates.
Selected Asia: Contribution of Intra-Asian and Non-Asian External Demand to Value Added(In percent of GDP)
Average over 1995-2000
Average over 2001-2008
Figure 15
World output is projected to contract by 1.1 percent in 2009 and grow by 3.1 in 2010
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2005 2006 2007 2008 2009 2010
World
Advanced
Emerging
Real Gross Domestic Product(Percent;quarter over quarter annualized)
Source: IMF, Global Data Source database.
Figure 16
Over the past years, global and Asian growth has been powered by U.S. consumers
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United States Euro AreaJapan Emerging AsiaOil exporters
Current Account Balances(Percent of world GDP)
Source: IMF, World Economic Outlook database.
Figure 17
High asset prices had fueled an consumption boom that was unprecedented after WWII
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84Real home price index (LHS)Price-earning ratio (LHS)Consumption (RHS)
U.S. Consumption: Cyclical or Structural Correction?
Sources: CEIC Data Company Ltd; and Schiller, Robert J, "Irrational Exuberance," http://www.irrationalexuberance.com.
(1929=100) (Percent of GDP)
Figure 18
Thank you