Transcript Slide 1

The Recovery in Developing Asia: Prospects and Challenges
Conference on the Post-Crisis Growth and Poverty Reduction in Developing Asia
Hanoi, Vietnam
Anoop Singh
Director
Asia and Pacific Department
March 22, 2010
Outline

A Multi-speed Global Recovery

Asian Low-Income Countries (LICs):
Achievements and Challenges

The Role of the IMF
2
3
A Multi-Speed
Global Recovery
4
Global growth has resumed, boosting exports...
Real GDP Growth
Merchandise Exports
(Percent; quarter on quarter annualized)
(Annualized percent change of 3mma over
previous 3mma)
15
50
Emerging
40
World
10
60
30
20
10
5
0
-10
Advanced
0
-20
-30
World
-5
-40
Emerging
-50
Industrial
-60
-10
04
05
06
07
08
Source: IMF, Global Data Source and staff calculations.
09
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
-70
Nov. 09
…but the advanced economies’ recovery is sluggish.
2009
2010
2011
Prelim
Proj.
Proj.
World
-0.6
3.9
4.3
Advanced Economies
-3.1
2.1
2.4
United States
-2.4
2.7
2.4
Euro Area
-4.0
1.0
1.6
Japan
-5.0
1.7
2.2
2.3
6.0
6.3
China
8.7
10.0
9.7
India
5.6
7.7
7.8
Brazil
-0.4
4.7
3.7
Emerging Asia
5.6
8.1
8.0
ASEAN-4
0.9
4.6
5.2
Emerging and Developing Economies
Source: World Economic Outlook.
5
6
Emerging Asia is leading the global recovery.
Real GDP Growth
(Quarter-on-quarter, SAAR; in percent)
Selected Asia 1/: Stock prices , Consumer
Confidence Index (CCI) and Retail sales (year-onyear percentage change)
15
20%
10
0.6
15%
5
0.4
10%
0.2
5%
0
0%
Emerging Asia
G2
-10
Other Emerging Economies
Industrial Asia
-5%
-10%
-15%
-20%
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
-15
retail sales
cci (-5)
stock prices (-1) (RHS)
2006M01
2006M04
2006M07
2006M10
2007M01
2007M04
2007M07
2007M10
2008M01
2008M04
2008M07
2008M10
2009M01
2009M04
2009M07
2009M10
-5
1E-15
1/ Includes Australia, Hong Kong,
Indonesia, Korea, Thailand, and Taiwan.
-0.2
-0.4
-0.6
The global outlook, however,
is unusually uncertain.
+
+
−
−
A stronger-than-expected improvement in
financial market sentiment
Stronger confidence effects boosting private
demand
Intensification of market concerns about fiscal
sustainability in some industrial economies
Diminished room for policy action in many
advanced economies
7
8
Asian LICs: Achievements
and Challenges
9
Impressive growth, and
significant progress in reducing poverty.
Real GDP Growth
Poverty Rate for Selected Asian LICs
(Average 2000–08, in percent)
(In percent of population)
Source: World Economic Outlook.
10
Asian LICs weathered the global crisis well.
Real GDP Growth in Comparison with
Pre-crisis Average (2000–07) (percent)
0
-1
-2
-3
-4
-5
-6
-7
LICs
ASEAN-4
1/ G-3 includes the US, European Union and Japan.
NIEs
G-3
1/
2008
2009
2010
Export Growth
(3-month moving average, SAAR)
11
The near-term growth outlook is good.
Asia: Real GDP
(Year-on-year percent change)
Asian LICs
Bangladesh
Cambodia
Lao P.D.R.
Mongolia
Nepal
Papua New Guinea
Sri Lanka
Vietnam
Emerging Asia
NIEs
ASEAN-4
China
India
Source: World Economic Outlook.
Average of
2000–07
2008
2009
2010
2011
6.3
5.8
9.6
6.6
6.6
3.8
2.2
5.1
7.6
7.8
5.0
5.2
10.1
7.2
6.1
6.0
6.7
7.8
8.9
4.7
6.7
6.0
6.2
7.1
1.7
4.6
9.6
7.3
4.7
5.4
-2.7
7.6
-1.0
4.0
4.5
3.5
5.3
5.6
-1.2
0.9
8.7
5.6
5.6
5.4
4.3
7.2
8.6
4.1
6.8
5.5
6.0
8.1
4.8
4.6
10.0
7.7
6.2
5.9
6.8
7.4
6.5
4.9
5.1
6.5
6.5
8.0
4.7
5.2
9.7
7.8
However, there are near-term challenges—
inflation is rising and some face external pressures.
Emerging Asia: Consumer Prices
Current Account Balance
(3-month percent change of 3-mma, SAAR)
(In percent of GDP)
25
20
15
10
5
0
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
-5
—
LICs
NIEs
ASEAN-4 (excl. Vietnam)
Source: World Economic Outlook.
12
13
There are also vulnerabilities from fiscal deficits and
relatively high public debt.
Fiscal Balance (2008–10)
Public Debt (2008–10)
(PPP-GDP weighted average, in percent)
(In percent of GDP)
Source: World Economic Outlook and IMF staff calculations.
* Excludes Nepal.
14
How can Asian LICs become the next generation of
emerging economies?
Nominal per Capita GDP
(2008, in U.S. dollars)
Illustrative per Capita GDP
Growth (in U.S. dollars)
Evidence points to building stronger institutions, macro
stability, financial development , and a business climate.
Global Competitiveness Index1
(Higher score = more competitive)
Business Climate
(Rank among 185 countries,
Rank #1 = best climate)
Institutions
Innovation
Business
sophistication
Market
size
Infrastructure
7
6
5
4
3
2
1
0
Tech.
readiness
Macroeconomic
stability
Health &
primary
education
Higher
education
& training
Financial market
Goods market
sophistication Labor market
efficiency
efficiency
Asian Low-income Countries (average) 2/
Malaysia and Thailand (average)
Source: World Economic Forum, Global Competitiveness Report, 2009-2010
Note: 1/ For selected Asian countries. Each factor is scored in the 1–7 scale
with 1 being the poorest quality and 7 being the best.
2/ Including Bangladesh, Cambodia, Mongolia, Nepal, Sri Lanka, and
Vietnam.
Source: World Bank, Doing Business Report
15
Strengthening public infrastructure and human capital
will clearly also be of central importance.
Infrastructure Index
Human Development Index
(Higher score = better)
(Combines education, health and income,
higher score = better)
7
1.2
6
1
5
4
0.8
3
0.6
2
0.4
1
0.2
Mongolia
Nepal
Bangladesh
Philippines
Cambodia
0
Australia
Japan
Singapore
Hong Kong, SAR
Korea
Malaysia
Thailand
China
Philippines
Indonesia
Mongolia
Vietnam
Lao PDR
Cambodia
Myanmar
Nepal
Bangladesh
Papua New Guinea
Source: World Economic Forum.
Vietnam
Indonesia
China
Thailand
Malaysia
Australia
Korea
Japan
Singapore
Hong Kong, SAR
0
Source: UNDP.
16
17
Providing a more attractive environment for foreign
direct investment will help develop export industries.
FDI plus Portfolio Investment to GDP
Exports to GDP
(Average 2007–09, in percent)
(Average 2007–09, in percent)
* Excludes resource-based economies.
18
The Role of the IMF
19
The IMF has responded on several fronts.
 Increasing global liquidity


IMF members’ central bank reserves were augmented with
US$283 billion in new Special Drawing Rights (SDRs)
LICs received around US$ 18 billion
 More resources for IMF lending



IMF’s loanable resources were tripled to US$750 billion
In 2009, US$3.8 billion in new concessional loans were
extended; a further US$8 billion will be made available in
the next two years
Borrowing limits have been doubled for all countries
 The cost of borrowing for LICs was reduced to zero
percent through 2011 (¼ percent thereafter)
 Lending facilities have been improved and made more
flexible
The IMF has satisfied an unprecedented demand for
assistance from a diverse range of member countries.
IMF Programs and Precautionary Credit Lines, 1997–2009
15
10
ARG ARG
TUR
Percent change in real GDP 1/
5
RUS
0
PHL
-5
BRA
BRA MEX
UKR
TUR
COL
IDN
PAK SRI
BRA
BLRMNG
SER
GEO GTM BIH
IRQ
COL
ARG
TUR
KOR
URY
Size of bubble = access in
percent of quota
-10
THA
IDN
HUN
SYC
ARG
ISL
UKR
-20
100 percent of
quota
-25
LVA
-30
1999
MEX
ARM
IDN
-15
1997
COL
POL
2001
2003
1/ Maximum cumulutive decline in three years from program inception
2005
2007
2009
ROM
20
In Asia, programs with Mongolia and Sri Lanka have helped21
stabilize the economy and facilitate a return to growth.
Change in Reserves and Growth (2007–11)
Mongolia
Sri Lanka
Thank you