Today’s global financial crisis is very much reminiscent of the 1997 Asian Financial Crisis. With the exports and labor-intensive industries being hit harder than Banda Aceh was with the tsunami that swept through its coasts, women were the most adversely affected. This was because of the strong gender composition of many of the most vulnerable industries today.
"I was swimming in the river near Godmanchester and I got the fright of my life when a large triangular dorsal fin broke the surface of the water just in front of me. It was so close I could have touched it."
Despite a surge in joblessness and a regional drop of the forecasted GDP growth to 5.3 percent expected in 2009, developing East Asian and Pacific countries may be able to look to China for hope during the current global economic slowdown. That's according to the World Bank's April 2009 edition of the East Asia & Pacific Update, which was released today.
The latest half-yearly assessment of the region's economic health, aptly titled "Battling the Forces of Global Recession", says there have already been signs of China's economy bottoming out by mid-2009. China's possible subsequent recovery in 2010, concludes the report, could contribute to the entire region's stabilization, and perhaps recovery.
There are a number of ways to review the findings of the report on the World Bank's website. Head over to worldbank.org/eapupdate to view specific chapters or download the full report. For an intimate view of people who are being affected by the ongoing financial crisis in East Asian and Pacific countries – including Cambodia, Thailand, Mongolia and the Philippines – check out "Faces of the Crisis". You can also view hi-res graphs from the report here.
Also, check back here in the next day or so for blog posts written by World Bank economists based in Cambodia and Lao PDR.
UPDATE: For country-specific expert perspectives on the new World Bank repot, check out blog posts from World Bank economists based in Cambodia and Laos. Stéphane Guimbert considers what contraction might look like in Cambodia. And Katia Vostroknutova takes a look at Laos' economy, which is less affected by crisis, but faces the increasing challenge of sustaining growth during the crisis.
Well, the bad news continues across the East Asia and Pacific region. The Financial Times just ran a long article on the "speed and ferocity of the region's economic downturn." The piece highlighted that the fast downturn was a result of Asia's over-reliance on export-led growth over the past decade. This follows the IMF's slashed growth forecasts for the large East Asian economies. It projected only 5.5 percent growth across developing Asia for 2009, which sounds great for most economies these days, but it is way off of the 7.8 percent posted last year.
The IMF is expecting only 6.7 percent growth in China, which is 1.8 percent less than what they forecast only in October. This contrasts sharply with the view of the World Bank's Chief Economist, Justin Lin, who just two weeks ago said he thought China could achieve the target rate of growth – 8 percent – this year because of fiscal stimulus spending.
In my last post, I discussed how emerging Asia is getting hit by the financial storm and the early signs of stress in the financial systems across the region. The intensity of this storm appears to be getting worse, but governments across East Asia are taking a wide range of measures to bolster their financial systems.
|Image credit: simonpocock at Flickr under a Creative Commons license.|
I have been in China for the past few weeks supporting the country team to appraise a package of support to China for recovery efforts following the May 12, 2008 Wenchuan Earthquake. One colleague participated in the recent Global Facility for Disaster Reduction and Recovery Consultative Group meetings in Copenhagen, Denmark and is now in Jakarta, Indonesia working with field staff, the country’s government, and partners on mainstreaming risk reduction into development programs. Another colleague of mine just returned from the Philippines and Vietnam, where she was stranded by flooding in Hanoi. In fact, she had to wade through knee-deep water when leaving a meeting at the Ministry of Finance. Of course, this represents just part of the team, since we work with a broader network of staff based in country offices who manage country-level programs and projects.
|A large number of export-oriented processing firms have already closed in Guangdong, the heart of China’s export machine. Image credit: lylevincent at Flickr under a Creative Commons license.|
Entrepreneurs and local officials here are certainly aware that demand for China’s exports has dropped sharply, and they wonder when the global economy will pick up again. Still, at the same time I was impressed at how many see this as an opportunity for China to pursue its rebalancing agenda. These discussions took place at a workshop in Jiangmen on Investment Climate, Innovation, and Industrial Transfer. The phrase “industrial transfer” refers to the fact that the most labor-intensive activities are moving away from the highly successful coastal cities, either to inland China, or other countries (Vietnam, Bangladesh) with lower wages.