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Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
Global Recession -Impact On The Asian Economy
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Global Recession -Impact On The Asian Economy

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Presentation made by renowned economist, Dr. Bernardo M. Villegas, Ph.D. Economics, Harvard University …

Presentation made by renowned economist, Dr. Bernardo M. Villegas, Ph.D. Economics, Harvard University
Vice President for Research, University of Asia and the Pacific (UA&P)
Chairman, Center for Research and Communication

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  • 1. Global Recession and Its Impact on the Asian Economy Dr. Bernardo M. Villegas November 2008
  • 2. Black Thursday 1929 <ul><li>Stock Market Crash </li></ul><ul><li>Passive Federal Reserve System </li></ul><ul><li>Ignorance of Keynesian Pump Priming </li></ul><ul><li>Panic in the Banking Sector </li></ul><ul><li>Unemployment Rate of 25% </li></ul><ul><li>Complete Dominance of the US Economy in the World </li></ul><ul><li>World Financial Market Illiquid </li></ul>
  • 3. Black Monday 2008 <ul><li>Real Estate Bubble </li></ul><ul><li>Proactive Federal Reserve System </li></ul><ul><li>US Government Pump Priming </li></ul><ul><li>No Panic in the Banking Sector </li></ul><ul><li>No Crash in the Stock Market </li></ul><ul><li>Unemployment Rate Manageable </li></ul><ul><li>Countervailing Power of Emerging Markets </li></ul><ul><li>Liquidity of Sovereign Funds </li></ul><ul><li>Massive intervention of European governments </li></ul>
  • 4. Growth Rates of Major Economies F – forecasts Source: World Economic Outlook, IMF, Oct 2008 Traditional Engines of Growth
  • 5. World Growth (GDP Growth Rates) F – forecasts Source: World Economic Outlook, IMF, Oct 2008 Traditional Engines of Growth
  • 6. Global Growth Slowdown <ul><li>Financial meltdown in the U.S. </li></ul><ul><li>High rates of inflation </li></ul><ul><li>Tight credit despite lower interest rate </li></ul><ul><li>High albeit moderating food and fuel prices </li></ul><ul><li>Slowdown in the EU and Japan </li></ul><ul><li>The U.S. twin (fiscal and trade) deficits continue to cause concern </li></ul>Threats to World Growth
  • 7. U.S. Economy: Still no end to financial turmoil <ul><li>Huge losses in the financial sector </li></ul><ul><li>Still uncertain results of U.S. government bailouts of failing banks </li></ul><ul><li>Previously robust private consumption spending has been depressed by the slump in the housing market </li></ul><ul><li>Real GDP growth to fall from 2.0% in 2007 to 1.6% or lower in 2008 </li></ul>
  • 8. Euro Area Economy <ul><li>Activity in Western Europe gathered momentum in 2006. GDP growth in the Euro area reached 2.8%, double its pace in 2005 </li></ul><ul><li>Slowing of growth in 2008 to 1.3% from 2.6% in 2007 </li></ul><ul><li>Falling housing investments </li></ul><ul><li>Growth should remain relatively stronger in Germany sustained by good export performance in the face of weaker consumer demand </li></ul><ul><li>The slowdown will reflect an uptick in unemployment in the Euro area, especially in Spain </li></ul>
  • 9. Japanese Economy <ul><li>Political instability caused by successive resignations of two Prime Ministers </li></ul><ul><li>Despite a stronger than expected GDP outturn in the first quarter of 2008, Japan’s economic outlook is weak for 2008 and 2009. </li></ul><ul><li>The yen weakened against the U.S. dollar in June but may strengthen if U.S. economy continues to be troubled by financial crisis. </li></ul><ul><li>Consumer prices will rise in 2008 </li></ul><ul><li>Reserves may be used to help ailing banks in the Asian region </li></ul>
  • 10. World’s Largest Economies
  • 11. GDP Growth Rates Asian Financial Crisis Source: ADB Key Indicators 2002
  • 12. GDP Growth Rates Asia: The Most Dynamic Region
  • 13. Emerging Engines of Growth BRICA
  • 14. Emerging Engines of Growth The Next Eleven
  • 15. Emerging Engines of Growth GDP % Change
  • 16. <ul><li>Overheating economy: possible credit and stock market bubble </li></ul><ul><li>Inflation rate reached 6.5% in October 2007, the highest monthly inflation in 11 years </li></ul><ul><li>Efforts to cool down economy may result in hard landing </li></ul><ul><li>Underdeveloped banking sector </li></ul><ul><li>Undervalued currency </li></ul><ul><li>Uncontrolled local officials </li></ul><ul><li>Shortage of local entrepreneurs and managers </li></ul><ul><li>High rates of poverty </li></ul><ul><li>Stricter regulations in IT </li></ul>Threats in China BRICA
  • 17. Opportunities in China <ul><li>GDP growth of 8% or over for the last two decades </li></ul><ul><li>Domestic market of some 250-300 million high-income consumers </li></ul><ul><li>High rate of investment at 50% of GDP </li></ul><ul><li>Foreign direct investments (FDIs) of US$60 billion or more yearly </li></ul><ul><li>Surging raw material demand </li></ul><ul><li>Greater integration of China and other Asian countries (e.g. ASEAN + China) </li></ul><ul><li>Demand for middle managers </li></ul>BRICA
  • 18. ASEAN GDP Growth Rates and Per Capita Income BRICA
  • 19. Domestic Markets Source: ADB Key Indicators 2007 BRICA
  • 20. Savings and Capital Formation Source: ADB Key Indicators 2007 BRICA
  • 21. Asian Economic Trends 2008-2010 <ul><li>Domestic markets as engines of growth: double track strategy </li></ul><ul><li>China as engine of growth of the Asia Pacific region </li></ul><ul><li>The predominance of China in manufacturing </li></ul><ul><li>Growth in intra-regional trade: increased complementarity </li></ul><ul><li>Continuing battle against mass poverty in the big economies </li></ul><ul><li>Outsourcing of manufacturing and services to Asia </li></ul><ul><li>Outsourcing is intra-company as well as inter-country </li></ul><ul><li>Focus on agricultural productivity in Southeast Asia </li></ul><ul><li>The emergence of SMEs and microenterprises </li></ul><ul><li>The “entrepreneurial challenge” to centrally planned economies </li></ul><ul><li>The challenge of innovations and productivity </li></ul>
  • 22. Consumer Trends in Asia <ul><li>Non-income consumption factors </li></ul><ul><li>Expanding middle class </li></ul><ul><li>Diversity of consumer tastes and lifestyles </li></ul><ul><li>“ Mallification” of Asian cities </li></ul><ul><li>Demographic gift stage in South and Southeast Asia </li></ul><ul><li>Rapid aging in Northeast Asia and Singapore </li></ul><ul><li>Widespread use of English </li></ul><ul><li>The telecom revolution </li></ul><ul><li>Spread of university education </li></ul>
  • 23. Selected Sunrise Industries in Asia <ul><li>Agribusiness </li></ul><ul><li>Mining </li></ul><ul><li>Triple Ts: Transport, Telecom, and Tourism </li></ul><ul><li>Infrastructures </li></ul><ul><li>Automobiles </li></ul><ul><li>Consumer durables </li></ul><ul><li>IT-enabled and IT services </li></ul><ul><li>Logistics and retailing </li></ul><ul><li>Health care and medical tourism </li></ul><ul><li>Education </li></ul><ul><li>Construction and real estate </li></ul><ul><li>Four Fs: Food, Fashion, Furniture, Fun </li></ul>
  • 24. Global Recession and Its Impact on the Asian Economy Thank you.

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