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China economic outlook: a tighter macro stance and renewed focus on structural reform

Louis Kuijs's picture

We just released our China Quarterly Update. For us (the economics unit in the World Bank’s Beijing office), this is a good disciplinary device to go through the data, look at what has happened, think about what the economic prospects and policy implications are, look in some more detail into some issues, and write it all down.

In addition to the usual topics, this time we focused a bit on two macro risks that have caught the attention of analysts: a property bubble and strained local government finances. In this blog I summarize our current understanding of the general economic outlook and what it means for policymaking. In a separate blog post, I will soon discuss the issues on local government finances.

The impact of the global crisis on remittances: Case of Russia and Tajikistan

Sudharshan Canagarajah's picture
  Photo © iStockphoto.com

The Russian economy suffered a double blow in 2008; first from the drop in world crude oil prices and secondly from a reversal of capital account inflows. The fall in national income and the adjustment of the balance of payments to the external shocks triggered a steep recession. After recording real GDP growth of 8.1 percent in 2007, growth fell to 5.6 percent on 2008 and then to negative 9 percent in 2009, one of the steepest falls of any major economy. This affected remittances, mainly to other CIS economies, through two channels: first because of a contraction in employment, especially in the cyclically sensitive construction industry and secondly because the depreciation of the Russian rouble, by 51 percent against the US dollar between March 2008 and March 2009, reduced the dollar value of remittances.

Remittances to Tajikistan fell much more sharply in the final quarter of 2008 than can be attributed to seasonal factors alone. The slump continued throughout 2009 with gross inflows of remittances valued in US dollars for the year falling 31 percent below the total for 2008. How did this fall in remittances, of more than $800 million (about one sixth of GDP) relative to the level in 2008, affect the macroeconomy in Tajikistan? There are three possible channels of adjustment to a reduction of foreign exchange inflows of this magnitude.

One year later: China’s policy stimulus results in strong 2009 economic growth, reason for optimism

Gao Xu's picture

This time last year, when the dismal 6.8% GDP growth data for China in the 4th quarter of 2008 came out, David Dollar, the former country director of China in the World Bank, asked in his blog whether one should interpret the data positively or

East Asia & Pacific: Risks to economic recovery from the return to business-as-usual in developed countries

Ivailo Izvorski's picture

The prediction season is in full swing, and prognosticators have, as usual, appended the warning that economic forecasts at this stage are subject to exceptional uncertainty.  Such exceptional uncertainty is always with us when looking ahead – there is always a fork in the road, no matter what the circumstances are. 

The nuance this year is that, while the recovery in East Asia will depend on prospects for the rest of the world, notably in the advanced economies, the outlook for those economies hinges on policies to address the causes of the financial crisis. Thus far, it’s clear that very little has been done to redress the regulatory issues that led to a near meltdown of the global financial system – while the rebound from the financial and economic crisis has been substantially stronger than anticipated only months earlier.  And these developments explain why opinions differ on the future path of regulatory reforms and their impacts.

Cambodia's economy in 2010: After unusual year, is recovery on its way for workers and entrepreneurs?

Stéphane Guimbert's picture

When I was asked to look back at Cambodia's economy in 2009 and ahead to 2010, I began to wish I had some magic tools such as this ox (although in that case, the ox was not that magical, since the 2009 harvest turned out to be quite good).

Thailand's economy in 2010: Growth in balance

Frederico Gil Sander's picture

In the years since the 1997/1998 Asian financial crisis, the Bank of Thailand (BoT) worked hard to build a heavy fortress around the nation’s financial sector. As a result, at a time when credit markets froze in developed countries and investors “fled to quality,” large amounts of capital still flowed into Thailand, where banks remained solid and well capitalized. Despite the financial strength brought by prudent policies, for the first time since the financial crisis, Thailand will see GDP and household consumption drop, and poverty could even increase in 2009. It is clear that the financial armor was insufficient to protect the economy from another crisis.

The culprit has been identified as Thailand’s excessive reliance on external demand, and talk of “rebalancing” growth towards domestic consumption and investment has become quite common (pdf). The idea of rebalancing makes some sense – but it can also be misleading. Let me explain.

World Bank Teams up with Google to Share Development Information

Joe Qian's picture

What’s the Gross Domestic Product (GDP) of India? If you type the inquiry into Google now, a graph will immediately display the data ranging from 1960 to 2008 and a figure showing that it is currently $1.22 trillion. If you click on the graph, it will immediately expand and allow you to compare historical figures as well as with that of other countries. I noticed, for instance, that India had a GDP of $36.6 billion in 1960; a 33 fold increase over the last 48 years!

The popular search engine has joined forces with the World Bank in sharing development data through the Data Finder, featuring 17 development indicators based on information provided by the World Bank to make the easy to understand information accessible to a broader audience. The public data tool is exceptionally easy to use and is excellent for comparative research or exploration of data over time. The indicators are as diverse as carbon dioxide emissions, fertility rates, GDP growth, and number of internet users.

The winds of change are blowing in Malaysia

Philip Schellekens's picture

The winds of change are blowing in Malaysia, as the government is taking on an ambitious agenda of structural reform. The objective is to climb up the income ladder and join the league of high-income economies. This is a difficult challenge – one which not many countries have successfully met in the post-war period.

Against this backdrop, the World Bank’s launch of a new report on the Malaysian economy (full disclosure: I lead the team who authors the report) is timely. The Malaysia Economic Monitor, which will be published twice a year, aims to provide context to the challenges facing Malaysia and serves as a platform for discussion and the sharing of knowledge.

Your questions about East Asia and Pacific's rebound from the crisis, answered by World Bank economists

Claudia Gabarain's picture

Almost like an audience-customized appendix to the World Bank's East Asia and Pacific Update November 2009, the live online chat held last Thursday by the regional Chief Economist, Vikram Nehru, and the lead author of the report, Ivailo Izvorski, answered a good number of questions in detail.

Submit questions on East Asian and Pacific economy for Nov. 12 online chat

James I Davison's picture

The World Bank’s latest economic assessment of developing countries in the East Asia and Pacific region, released a week ago, came to some interesting conclusions and attempted to answer a lot of questions on a complex subject. Notably, the report’s authors pointed to the major role China has played in the region’s swift rebound from the crisis.


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