Transcript East Asia and Pacific Overview Milan Brahmbhatt Lead Economist,

East Asia and Pacific Overview
Milan Brahmbhatt
Lead Economist,
East Asia and Pacific Region
The World Bank
April 26, 2004
Key issues for the outlook
 The
cyclical rebound and the
international environment
 The
China factor
 Investment
reforms
climate and domestic
Unexpectedly robust growth from 2003 H2
Table 1. East Asia Economic Growth
East Asia - Quarterly GDP Growth
(% Change Year Ago)
12.0
9.0
6.0
3.0
0.0
Q11999
Q3
1999
Q1
2000
Q3 Q12001 Q3
2000
2001
Q1
2002
-3.0
E.Asia
SE Asia
-6.0
NIEs
China
Q3
2002
Q1
2003
Q3
2003
East Asia
Develop. E. Asia
S.E. Asia
Indonesia
Malaysia
Philippines
Thailand
Transition Econ.
China
Vietnam
Small Countries
Newly Ind. Econ.
Korea
3 other NIEs
Japan
2002
5.9
6.7
4.4
3.7
4.1
4.4
5.4
2003
5.7
7.6
5.1
4.1
5.2
4.5
6.7
2004
6.3
6.9
5.4
4.5
5.5
4.2
7.2
2005
5.9
6.5
5.4
5.0
5.5
4.1
6.5
8.0
7.0
2.7
4.9
7.0
3.1
9.1
7.2
3.9
3.0
3.1
2.9
7.7
7.0
4.2
5.4
5.3
5.5
7.2
7.2
4.2
4.9
5.3
4.5
-0.3
2.7
World Bank East Asia Region; April 2004.
3.1
1.4
Solid gains on poverty reduction
Poverty - Headcount Index
($2 a day poverty line. Percent)
90
Vietnam
East Asia
Other Small *
S.E. Asia (4)
China
75
60
45
* Cambodia, Lao PDR, Papua New Guinea
30
1990
1996
1999
2000
2001
2002
2003
2004
2005
Developed world recovery gains
strength
50.0
East Asia - Export Growth
Table 2. International Economic Environment
(US$ - % Change Year Ago)
2002
China
40.0
30.0
E.Asia
20.0
10.0
SE Asia
0.0
1
2
3
1
2
3
0
1
2
3
1
2
3
4
t-0 n-0 pr-0 ul-0 ct-0 n-0 pr-0 ul-0 ct-0 n-0 pr-0 ul-0 ct-0 n-0
c
a
a
a
a
J
J
J
O J
A
O J
A
O J
A
O J
-10.0
NIEs
-20.0
2003
2004
2005
% Change from previous year, except interest rates
GDP Growth
World
1.8
2.6
3.7
3.1
OECD
1.4
2.0
3.2
2.6
United States
2.2
3.2
4.6
3.2
Japan
-0.3
2.7
3.1
1.4
Euro Area
0.9
0.4
1.7
2.3
World Trade (Volume)
3.5
4.6
8.7
7.9
a/
CPI Inflation - G7
1.3
2.0
1.4
1.7
Oil Price - $/bbl
24.9 28.9
26
23
- % Change
2.4 16.0 -10.0 -11.5
Non-oil Commodity
5.1 10.0
10.4
-2.9
Prices
LIBOR (US$. 6 Mo.)
1.8
1.2
1.5
3.5
Source: World Bank DEC Prospects Group update March 2004.
a/ In local currency, aggregated using 1995 weights.
Rising commodity demands help rich
and poor
Income gains/losses due to selected commodity
price changes (as % of GDP)
World Semiconductor Billings
Asia ex Japan as %of World Sales:
December 1995: 20.0%
December 1998: 23.4%
October 2000: 24.7%
December 2000: 33.3%
January 2004: 39.0%
5.0
Asia x. JP
Japan
Europe
Americas
4.0
12
3.0
8
2.0
4
1.0
2003
2004
Th
aila
nd
Vie
tna
m
-1.0
PN
G
Jan-04
Jan-03
Jan-02
Jan-01
Jan-00
Jan-99
Jan-98
Jan-97
Jan-96
Jan-95
Ch
ina
0.0
0
Jan-94
Actual and Assumed
Price Changes (%):
2003 2004
Oil
15.9 0.0
Rice
3.0 3.7
Edible Oils 12.3 15.7
Iron Ore
9.0 18.6
Copper
14.1 34.9
Rubber
41.5 1.8
Ko
rea
Mo
ng
olia
Ma
lay
sia
Ph
ilip
pin
es
16
(Bill US$. 3 Mo.Mov.Averages. 1/94-1/04)
Ind
on
es
ia
20
Returning portfolio flows help boost
asset prices, reserves and...
East Asia - Foreign Reserves
Stock market indices (Jan.1 2003=1)
2.1
Indonesia
Malaysia
Thailand
Korea
(US$ Bill.)
1100
1.9
900
1.7
China
Malaysia
Korea
Singapore
Indonesia
Philippines
Taiwan (China)
Thailand
700 Increase in reserves:
1.5
1.3
500
1.1
300
0.9
100
-100
$35 bn
$65 bn
$153 bn
$227 bn
Ja
n-1
Ju 996
lJa 1996
n-1
Ju 997
lJa 1997
n-1
Ju 998
lJa 1998
n-1
Ju 999
lJa 1999
n-2
Ju 000
lJa 2000
n-2
Ju 001
lJa 2001
n-2
Ju 002
lJa 2002
n-2
Ju 003
lJa 2003
n-2
00
4
Ja
n-0
1
Ap
r-0
1
Ju
l-0
1
Oc
t-0
1
Ja
n-0
2
Ap
r-0
2
Ju
l-0
2
Oc
t-0
2
Ja
n-0
3
Ap
r-0
3
Ju
l-0
3
Oc
t-0
3
Ja
n-0
4
0.7
2000:
2001:
2002:
2003:
... exchange rates (in some cases)
Exchange Rates vs. US$
(Rise=appreciation. Jan.2002=1)
1.4
1.3
Indonesia
Korea
Philippines
Thailand
Yen/S
Euro/$
Taiwan (China)
1.2
1.1
1.0
0.9
-02 ar-02 y-02 ul-02 p-02 ov-02 an-03 ar-03 y-03 ul-03 p-03 ov-03 an-04 ar-04
n
a
J Se N
J Se N
J
J
J
M Ma
M Ma
M
Booming China helps drive Asian
exports ...
Foreign market contribution to 4 East
Asian countries' total export growth (%)*
150
* Contributions sum to 100%
100
50
0
2002
2003
Korea
-50
China+HK
2002
2003
Taiwan
(China)
Other Asia
2002
2003
Thailand
Japan
2002
2003
Malaysia
USA
Other
... changes in the pattern of regional
integration ...
China: Imports of Machinery & Transport Equipment
(Total and by source country)
(As % of China’s total imports)
M&T Equipment
Japan
USA
Europe (15)
Emerging East Asia
Korea
Singapore
Taiwan (China)
Indonesia
Malaysia
Philippines
Thailand
1996
39.4
11.3
5.1
10.0
8.2
2.3
1.0
4.2
0.0
0.4
0.0
0.2
2002
46.4
10.6
4.6
7.9
15.5
4.1
1.2
6.1
0.3
1.9
0.9
0.8
Change
7.0
-0.8
-0.5
-2.1
7.3
1.8
0.2
1.9
0.3
1.6
0.9
0.6
Source:World Bank calculations based on COMTRADE data
... and greater discussion of
appropriate exchange rate regimes
Criteria for Optimum Currency Area
0.90
0.80
France-Germany
Canada-USA
Correlation of GDP Growth 1990-02
0.70
0.60
Japan-Korea
0.50
0.40
0.30
China-Thailand
0.20
0.10
0.00
-0.100.00
-0.20
-0.30
China-USA
China-Korea
1.00
2.00
3.00
Japan-USA
4.00
5.00
Korea-USA
China-Japan
-0.40
Bilateral Trade Intensity Index 2000-02
6.00
A better backdrop for domestic
investment recovery
Contributions to 2003 Growth in Final Demand
8.0
Exports
Inventories
Fixed Investment
Govt. Consump.
Private Consump.
6.0
Capacity Utilization/Operating Ratio
1996 Q1-2003 Q4
85.0
Korea
75.0
4.0
65.0
2.0
55.0
0.0
Thailand
Indonesia
Korea
Malaysia Philippines Thailand
45.0
-2.0
(Final demand is the sum of domestic consumption, investment and exports.)
1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3
96 96 97 97 98 98 99 99 00 00 01 01 02 02 03 03
19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20
Continued progress on financial and
corporate restructuring ...
Non performing loans in commercial banks
Listed Non-financial companies:
Ordinary Income to Sales (%)
(As % of total loans)
Thailand
Thailand
Philippines
Dec-03
Philippines
2002
Dec-02
Dec-01
Malaysia
2001
Malaysia
Dec-00
2000
Dec-98
Korea
Korea
Indonesia
Indonesia
0
10
20
30
40
50
-5
0
5
10
15
...while grappling with long term
institutional and governance reform
issues
8
CLSA Corporate Governance Index 2003
Governance Indicators across Regions
(2002)
1.00
East Asia (15)
Latin America (18)
CEE (13)
Kaufman, Kraay &
Mastruzzi (2003).
Based on enterprise,
6
0.50
citizen and expert
surveys
4
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Re
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al
liti
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Po
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Th
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H Source: CLSA Emerging Markets, 2003 Ph
ice
&
Ac
2
St
ab
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cn
.
0.00