East Asia & Pacific Outlook, Jan 2014

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  • Project path: R:\GMT\GEP\GEP14a\Charts\GEP14a.cwpChartset name: EAPChart name: Chart 7. EAP Quarterly GDP CopyChart internal id: LPIRAFDHCIMA
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  • East Asia & Pacific Outlook, Jan 2014

    1. 1. Global Economic Prospects January 2014 Ekaterine Vashakmadze World Bank January 2013 East Asia & Pacific Region www.worldbank.org/globaloutlook
    2. 2. 2013 marked another year of weakening growth in East Asia and the Pacific region with growth moderating to 7.2% from 7.4% in 2012.
    3. 3. 2013 marked another year of weakening growth in East Asia and the Pacific region with growth moderating to 7.2% from 7.4% in 2012.
    4. 4. 2013 marked another year of weakening growth in East Asia and the Pacific region with growth moderating to 7.2% from 7.4% in 2012.
    5. 5. Growth in China was unchanged from the 7.7% recorded in 2012. A one percentage point slowdown in growth in the rest of the region reflects a moderation of economic activity in Indonesia, Malaysia, and Thailand.
    6. 6. Growth in China was unchanged from the 7.7% recorded in 2012. A one percentage point slowdown in growth in the rest of the region reflects a moderation of economic activity in Indonesia, Malaysia, and Thailand.
    7. 7. Figure 1. Growth in 2013 moderated reflecting a sharp slowdown in the first quarter in a number of large Middle Income countries of the region partly reflecting policy tightening aimed at unwinding imbalances which resulted from loose policies implemented during 2007 and 2012 Quarterly GDP, percent change, saar 12 Real credit growth, % change, year-over-year 60 50 40 30 20 10 0 -10 -20 0 China China Malaysia Indonesia Thailand Indonesia Developing countries excl. China Vietnam (RHS) Source: World Bank, IMF IFS. Oct '13 Jan '13 Apr '12 Jul '11 -10 Oct '10 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 0 10 Jan '10 2 20 Apr '09 4 30 Jul '08 6 40 Oct '07 8 50 Jan '07 10
    8. 8. Figure 2. The impact of domestic adjustment was also exacerbated by a tightening of international financing conditions in the second quarter of 2013 Sovereign Bond Interest Rate Spreads, basis points over US 450 400 350 300 250 200 150 100 50 May '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Developing countries Indonesia Source: World Bank, IMF, IFS, Datastream. Vietnam China
    9. 9. Figure 3. Imports contracted sharply reflecting policy tightening and contributed to stronger net-exports Import volume, % change, 3m/3m, saar 60 40 20 0 -20 -40 -60 Jul '12 Oct '12 China Jan '13 Thailand Source: World Bank, Datstream. Apr '13 Jul '13 East Asia excluding China P.R. Oct '13
    10. 10. Figure 4. Business sentiment started to improve in the second half of 2013, but remains precarious Diffusion index, greater than 50 indicates expansion 60 58 56 54 52 50 48 46 44 42 40 Jan '12 May '12 Vietnam Sep '12 South Korea Jan '13 Indonesia Source: World Bank, Markit Economics, Datstream. May '13 Japan Sep '13 China
    11. 11. Figure 5. Regional exports rebounded following a six month period of contraction Export volume, % change, 3m/3m, saar 70 50 30 10 -10 -30 -50 May '12 Aug '12 China Nov '12 Indonesia Source: World Bank, Datstream. Feb '13 May '13 East Asia (excl. China) Aug '13 Philippines Nov '13
    12. 12. Figure 6. Pressures on the regional currencies have considerably lessened from May-September tightening episode, but remain present particularly in Indonesia reflecting on-going adjustment to external balance pressures and in Thailand related to on-going political tensions. Nominal Effective Exchange Rates (April 1, 2013=100) 110 105 China Malaysia 100 95 Thailand 90 85 Indonesia 80 May '13 May '13 Jun '13 Jul '13 Aug '13 Sep '13 Oct '13 Nov '13 Dec '13 Source: World Bank, Datstream.
    13. 13. Overall growth in the region is expected to stay flat at around 7.2% in 2014 and ease insignificantly to 7.1% in 2015 and 2016.
    14. 14. Overall growth in the region is expected to stay flat at around 7.2% in 2014 and ease insignificantly to 7.1% in 2015 and 2016.
    15. 15. Overall growth in the region is expected to stay flat at around 7.2% in 2014 and ease insignificantly to 7.1% in 2015 and 2016.
    16. 16. The region… although of a relatively low probability, the outlook would be sensitive to the risks of either an abrupt tightening of global financing conditions, or a rapid decline in China’s investment rates.
    17. 17. The region… although of a relatively low probability, the outlook would be sensitive to the risks of either an abrupt tightening of global financing conditions, or a rapid decline in China’s investment rates. Major tail-risks have subsided but, have not been eliminated and include protracted recovery in the Euro Area and fiscal policy uncertainty in the United States.
    18. 18. The region… although of a relatively low probability, the outlook would be sensitive to the risks of either an abrupt tightening of global financing conditions, or a rapid decline in China’s investment rates. Major tail-risks have subsided but, have not been eliminated and include protracted recovery in the Euro Area and fiscal policy uncertainty in the United States. In addition, although currently contained, an escalation of country-level (Thailand, for example) as well as bilateral and geo-political tensions may undermine regional growth prospects.
    19. 19. Global Economic Prospects January 2014 Ekaterine Vashakmadze World Bank January 2013 East Asia & Pacific Region www.worldbank.org/globaloutlook

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