regional economic outlook and development challenges in...
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___________________________________________________________________________
2018/FDM1/007 Session 2.3
Regional Economic Outlook and Development Challenges in Asia and the Pacific - Presentation
Purpose: Information
Submitted by: Asian Development Bank
Finance and Central Bank Deputies’ Meeting
Port Moresby, Papua New Guinea15-16 March 2018
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Regional Economic Outlook and Development Challenges in Asia and the Pacific
Juzhong ZhuangDeputy Chief Economist and Deputy Director General
Economic Research and Regional Cooperation Department
Asian Development Bank
APEC Finance and Central Bank Deputies’ Meeting
15 March 2018 | Port Moresby, Papua New Guinea
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Key messages
▪ APEC economic outlook remains stable amid
strengthening global economic recovery and trade growth,
but there are a few downside risks
▪ Technology development and e-commerce can help unlock
the growth potential and promote inclusiveness
▪ Needs to improve ICT and logistics/delivery infrastructure while
pursuing legal, regulatory and institutional reforms
▪ Asia continues to face large infrastructure gap and public-
private partnership can help fill this gap
2
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Regional Outlook and Risks
3
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APEC growth accelerated in 2017 and projected to remain solid in 2018…
4
Note: Based on seasonally adjusted annualized rates.
Source: ADB. Asian Development Outlook 2017
Supplement. Manila.
GDP Growth—G2 (%)
f=forecast.
Source: Asian Development Outlook Supplement
December 2017, ADB: World Economic Outlook
Database October 2017, IMF: and national sources.
1.9
2.4
2.2
-1.5
0.0
1.5
3.0
2010 2012 2014 2016 2018
Euro area US G2 average
3.4 3.43.0
3.6 3.4
6.46.1 5.9
6.25.8
0
2
4
6
8
2014 2015 2016 2017e 2018f
APEC Developing APEC-Asia
GDP Growth (%)
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5
Monthly Trade Value Growth (%, y-o-y, 3-month moving average)
…benefiting from a synchronized recovery in trade growth
-20
-15
-10
-5
0
5
10
15
20
Jan-1
4
Apr-
14
Jul-14
Oct-
14
Jan
-15
Apr-
15
Jul-15
Oct-
15
Jan-1
6
Apr-
16
Jul-16
Oct-
16
Jan-1
7
Apr-
17
Jul-17
Oct-
17
Dec-1
7
Developing APEC-Asia Developing APEC-Americas Advanced APEC
y-o-y = year-on-year. 3MA = 3-month moving average
Note: No data available for Papua New Guinea. Actual data for Brunei Darussalam are only available until October 2017. Trade values for the
months of November and December 2017 were estimated average growth rate during the preceding three years with available data.
Source: ADB calculations using data from CEIC (accessed February 2018).
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Yet large variations across APEC economies
* = actual 2017 figures, e = estimate, f = forecast, NIEs = newly industrialized economies, PRC = People’s Republic of China.
Note: Developing APEC-Asia based on ADB’s definition.
Source: Asian Development Outlook Supplement December 2017, ADB: World Economic Outlook Database October 2017, IMF: and national
sources.
GDP Growth Rates (y-o-y,%)
Economy 2017e 2018f Economy 2017e 2018f
Advanced APEC Developing APEC─Asia
Australia 2.3 3.3 NIEs 3.2* 2.9
Canada 3.0 2.1
Japan 1.6* 1.2 Brunei Darussalam 0.2 1.0
New Zealand 3.5 3.0 PRC 6.9* 6.4
Russian Federation 1.8 1.6 Indonesia 5.1* 5.3
US 2.3* 2.4 Malaysia 5.9* 5.3
Developing APEC─Americas Papua New Guinea 2.5 2.8
Chile 1.4 2.5 Philippines 6.7* 6.8
Mexico 2.1 1.9 Thailand 3.9* 3.8
Peru 2.7 3.8 Viet Nam 6.7 6.7
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A few downside risks to the outlook
7
▪Monetary policy divergence between
advanced and developing economies
▪ Inward-looking trade policies
▪High private sector debt and leverage in
emerging economies
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The Digital Connectivity and E-Commerce
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Asia and the Pacific is the largest and fast growing e-commerce market
9Source: Euromonitor International.
0
1020
3040
5060
7080
90
0
200
400
600
800
1000
1200
Asia andthe Pacific
EasternEurope
WesternEurope
LatinAmerica
MiddleEast and
Africa
NorthAmerica
%
$ b
illio
n
2017 market size (left) 2021 forecasted market size (left) Growth rate (right)
Comparison of Internet Retailing Market Size, 2017-2021 (forecast)
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It is also the largest as % of GDP
10Source: E-commerce Foundation.
1.3
1.6
2.0
2.4
3.1
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011 2012 2013 2014 2015
0.7
0.8
2.6
3.1
4.5
0.0 2.0 4.0 6.0
Middle East and North Africa
Latin America
Europe
North America
Asia andthe Pacific
Global E-commerce
(% of GDP)
E-commerce as % of regional
GDP, 2015
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To unlock the potential of digital trade and e-commerce,
it is imperative to take on the following measures:
Institute legal,
regulatory and
institutional reforms
Intensify regional
efforts to modernize
and harmonize
regulations.
Enhance affordability
of and access to ICT
E-commerce boosts efficiency, enhances market access for
businesses and consumers, and generates spillover effects
Improve logistics and
delivery infrastructure
Broaden the e-
payment availability
and options
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ICT connectivity is expanding, but large variations persist across Asia
Mobile Cellular and Fixed Broadband Subscriptions (per 100 people) and Internet Users
(% of population) in Asia and the Pacific
Note: For fixed broadband subscriptions, 2002 reported the required (earliest year) data for the largest number of constituent countries in each subregion.
Source: World Bank. World Development Indicators. http://www.data.worldbank.org (accessed February 2018).
0
20
40
60
80
100
120
140
160
2000 2005 2010 2016
a. Mobile cellular subscriptions
0
5
10
15
20
25
30
2002 2005 2010 2016
b. Fixed broadband subscriptions
0
10
20
30
40
50
60
70
2000 2005 2010 2016
c. Internet users
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Sustaining Development through
Infrastructure Investment
13
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0.0
0.4
0.8
1.2
Energy Transportation ICT Water
$ trillion in 2015 prices
$0.15
[9%] $0.05
[3%]
Asia’s infrastructure needs are large
14
ICT = Information and Communication Technology. Values inside the brackets denote % of total.
Source: ADB estimates based on national sources; World Bank. Private Participation in Infrastructure Database; and World Bank. World
Development Indicators.
$1.7 trillion annual investment needed through 2030
$0.98
[56%]
$0.60
[32%]
5.2
5.7
7.8
8.8
9.1
0 2 4 6 8 10
East Asia
Southeast Asia
Central Asia
South Asia
The Pacific
Infrastructure investment needs (% of GDP, 2016-2030)
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Public-private partnership can help fill the infrastructure gap
15
PPP committed investments by
sector, 1991–2015 ($700 billion)
PPPs in Asia rose fourfold in
25 years
0.0
0.3
0.5
0.8
1.0
1991-1995 1996-2000 2001-2005 2006-2010 2011-2015
‘000 number of projects
Central Asia East Asia
The Pacific South Asia
Southeast Asia
Energy54%
ICT11%
Transport30%
Water and
sewerage5%
ICT = Information and Communication Technology
Source: ADB estimates based on national sources; World Bank. Private Participation in Infrastructure Database; and World Bank. World
Development Indicators.
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Factors for PPP project success
• Project design
• Solicited proposals with competitive bidding more likely to survive than unsolicited
• Green field projects more likely to survive than brown field
• Risk allocation between government and private partners matters
• Institutional arrangements
• Dedicated PPP unit makes PPP more likely to survive
• Macroeconomic environment
• Macroeconomic performance
• Fiscal balance
• Socioeconomic stability
• Law and order
• Degree of corruption
16
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Key messages
▪ APEC economic outlook remains stable amid
strengthening global economic recovery and trade growth,
but there are a few downside risks
▪ Technology development and e-commerce can help
unlock the growth potential and promote inclusiveness
▪ Needs to improve ICT and logistics/delivery infrastructure while
pursuing legal, regulatory and institutional reforms
▪ Asia continues to face large infrastructure gap and public-
private partnership can help fill this gap
17
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Thank you!
18