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Regional roundup: Finance in East Asia – Feb. 11

James Seward's picture

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.

East Asian governments take action in time of financial crisis

James Seward's picture

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.

Reducing risk from natural disasters takes partnerships, teamwork

Zoe Elena Trohanis's picture

Image credit: simonpocock at Flickr under a Creative Commons license.
If you want to know what movies are being shown on flights across the Pacific, ask me or my World Bank colleagues in the East Asia and Pacific region's Disaster Risk Management team. We have been passing one another by plane for the past month and a half. Responsible for coordinating disaster risk management efforts and activities for the region, we are a busy group, no doubt about it.

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.

Anxiety and hope in Guangdong, China

David Dollar's picture

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.
I visited the Pearl River Delta in Guangdong this week, the heart of China’s export machine. A large number of export-oriented processing firms have already closed in Guangdong in sectors such as toys and footwear. Of course, firms close all the time in market economies, while others start up. This churning is part of the normal cycle in a market economy and is one of the key sources of productivity growth. Less productive firms die off while the successful new firms have especially rapid productivity growth. As the global economic crisis hits China, it is hard to keep track in real time of the balance of closings and openings.

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.

Economics of Sanitation

Jaehyang So's picture

Most of us in the development community are aware that proper water and sanitation services are crucial for life and health. Proper sanitation especially can decrease the instances and spread of disease. But in making the case to Ministers of Finance, it is often the economic and financial case that we have to make in order to garner the investments needed to make a difference.

A Water and Sanitation Program report we released last month, called Economic Impact of Sanitation in Indonesia (pdf), makes that case for that country. The report says that the economic costs of poor hygiene and sanitation in Indonesia reached an estimated US$6.3 billion, or 2.3 percent of GDP in 2006.


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