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East Asia & Pacific is facing some great development challenges today: urbanization, protection of the environment, the need to find renewable energy sources and many others. This site wants to create a conversation around those important issues. More »

EAP Update

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

Submitted by Claudia Gabarain on Sun, 2009-11-15 23:01

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.

From diversifying Cambodia's economy to the right moment to suspend governments' stimulus packages, Vikram and Ivailo also touched on the effect of a weak US dollar in East Asian economies, on the challenges to generate domestic growth in export-dependent economies, and on the risks of inflation and asset price bubbles in the region, among others. Take a look at the transcript.

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

Submitted by James I Davison on Tue, 2009-11-10 12:37

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.

Later this week, two World Bank economists will be answering your questions about the report in a live online chat. On Thursday, Nov. 12, at 10:00 a.m. Washington DC time (15:00 GMT or 11:00 p.m. Beijing time), join Ivailo Izvorski, lead economist and author of the report, and Vikram Nehru, Chief Economist for the East Asia and Pacific region to send questions and read their answers. You’re strongly encouraged to submit your questions in advance.

In Thailand, finding the way back into growth: Step 1, switch the supply chains back on

Submitted by Frederico Gil Sander on Wed, 2009-11-04 12:35

As part of its regular monitoring of the corporate sector in Southeast Asia, the World Bank economic team I am part of in Thailand has been working on a short case study of supply chains of Japanese multinational companies (MNCs) in the electrical and electronics (E&E) industry. We wanted to hear directly from firms about how the crisis affected them, how they were able to adjust so quickly to the drop in demand, what the rebound looked like, and what were the prospects going forward to upgrade along the value chain. I have learned a great deal from these interviews, and have become convinced that supply chains are central to understanding the current crisis in Thailand and East Asia more generally.

Some facts: the crisis had a disproportionate impact on manufacturing. In Thailand, manufacturing represents about 40 percent of GDP, but contractions in manufacturing value added have accounted for about 75 percent of the contraction of headline GDP. Within manufacturing, the auto and E&E industries account for the bulk of the contraction. Most of the output in those industries is exported, and more than three-fourths of the decline in Thai exports during the crisis was due to falls in shipments from the auto and E&E industries. My conclusion is that the magnitude of the crisis in Thailand has been driven primarily by these two industries.

China: Robust growth in sight provides room for shift in policy focus

Submitted by Louis Kuijs on Tue, 2009-11-03 23:11

The economic data for the third quarter of 2009, released almost two weeks ago, confirmed an impressive recovery in China’s economy, supported by very large fiscal and monetary stimulus. Real GDP growth rose to 8.9 percent year-on-year in the third quarter. This is clearly good news, for China and many other countries whose economies are benefiting at the moment from strong demand from China. As the World Bank economic team for China (which I'm part of) argues in more detail in the new China Quarterly Update, it also means that it is time to consider a less expansionary macroeconomic policy stance and focus more on the structural reforms needed to rebalance the economy and get more growth out of the domestic economy on a sustained basis.

It’s not as if China has not been hit by the global recession. China’s real economy has been hit hard. Exports fell sharply since November last year, and the contribution of net external trade to GDP growth was minus 3.6 percent points in the first three quarters of this year – with the negative contribution particularly large in the third quarter (in year-on-year terms).

Growth in China continues to influence East Asia’s economic recovery, two new World Bank reports say

Submitted by James I Davison on Tue, 2009-11-03 23:10

Regionally speaking, developing countries in East Asia and Pacific have rebounded surprisingly quickly from the financial crisis and global recession. But according to a report just released by the World Bank, the regional economic picture isn’t as rosy when China is taken out of the equation. The latest East Asia and Pacific Update report, an assessment of the economic health of the region released every six months, is titled “Transforming the Rebound into Recovery.” The rebound, the report says, was driven in part by large and timely fiscal stimulus spending led by China and Korea. Still, despite the well-performing economies of Indonesia and Vietnam, developing East Asia excluding China is projected to grow at just around 1 percent in 2009. And for Cambodia, Malaysia and Thailand, GDP is contracting.

The China Quarterly Update – a separate report released at the same time as the latest regional assessment and focusing specifically on the Chinese economy – gives a more complete picture of why the country has seen such robust economic growth and what the future may hold. The Bank now projects China to see GDP growth of 8.4 percent for 2009, says the report. The report’s lead author (and blogger) Louis Kuijs wrote an accompanying blog post, which can be read here.

I really recommend taking some time to explore the findings of both reports by visiting the East Asia Update and China Quarterly pages, where you can also download high resolution graphs and watch video interviews with the economists. Also, you'll be able to ask two World Bank economists questions about the regional report in an online chat taking place Thursday, November 12, at 10 a.m. DC time (15:00 GMT or 11:00 p.m. in Beijing). Send your questions now for a better chance of getting them answered.

Health restored? Uncertainty in forecasting Thailand's economic outlook

Submitted by Frederico Gil Sander on Tue, 2009-09-22 14:05

In Laos, the government has reportedly already healed the economy from the economic flu. But in Thailand, there seems to be more uncertainty about the health of the economy, and some commentators are not ready to call the recession over. The Thai economy contracted by 4.9 percent from the previous year in the second quarter of 2009, better than the 7.1 contraction posted in the first quarter. What can we expect for the rest of 2009 and 2010?
 
This is very timely question for all World Bank economists in East Asia, who are currently finalizing their forecasts for the upcoming East Asia and Pacific Update economic report, to be launched in November. On my end, I am writing this post from Cambodia, where I am meeting with palm readers, fortune tellers and other economic healers to ensure highly accurate forecasts. Let me offer a preview of what the soothsayers are saying.

Live online chat with World Bank economists on April 16

Submitted by James I Davison on Tue, 2009-04-14 15:50

"There are signs that the strongest economy in the region, China, is beginning to turn the corner. ... A return to stronger economic expansion in China next year should help support growth among the countries of the East Asia and Pacific region."

Despite an expected surge in joblessness and shrinking GDP growth forecasts in many of the region's countries, the World Bank's latest East Asia and Pacific Update, released last week, highlights China as a hope for leading the way to recovery. The biannual assessment of the region's economic health predicts economic activity in China to bottom out by midyear.

This week on Thursday, you'll have a chance to ask questions to the World Bank economists in a live online chat. Lead Economist and author of the report Ivailo Izvorski and Vikram Nehru, Chief Economist for the East Asia and Pacific region, will answer questions on April 16 at 9:30 a.m. U.S. Eastern time (13:30 GMT). Be sure to submit your questions in advance for a better chance of having them answered. Check it out here.

Remittances and the Philippines' economy: the elephant in the room

Submitted by Eric Le Borgne on Tue, 2009-04-07 14:41

In the World Bank's latest semi-annual economic update for the East Asia and Pacific region, titled "Battling the Forces of Global Recession" and released today, we mentioned the Philippine economy's resilience, both in absolute and relative terms. The latter is easy to grasp in a few numbers: global growth is projected to turn negative in 2009, as will growth in a large number of countries in the region (for example, Malaysia and Thailand).

In absolute terms, while we project growth to decelerate from its 2007 peak of 7.2 percent to 1.9 percent this year (after a respectable 4.6 percent in 2008), the Philippines would still be far from a recession – contrary to what happened during the 1997 Asian crisis. Many reasons explain the country's resilience, including policy and regulatory reforms that responded to the lessons drawn from the Asian crisis. However, there is one key factor driving this resilience.

Laos' economy less affected by crisis, but sustaining growth a challenge

Submitted by Katia Vostroknutova on Tue, 2009-04-07 09:21

With a relatively unsophisticated economy that is agriculture- and natural resource-based, Laos has been affected by the crisis less than some neighboring countries.

In the aftermath of the 1997 Asian crisis, Lao PDR grew steadily, on average by 6 percent a year in real terms. Laos also impressively lifted one-eighth of its population out of poverty between 1993 and 2003. Laos aims to graduate from a low-income country status by 2020. The current global financial crisis, however, will slow down the progress in poverty reduction, as well as the growth rate and reduce government ability to invest in health, education, and infrastructure, therefore lowering Laos' chances to fulfill this goal (for more, see the World Bank's East Asia & Pacific Update, a regional economic assessment released today).

One of the poorest countries in the world, Laos is a small land-locked country in Southeast Asia, bordering and trading with China, Vietnam, Thailand, and Cambodia. Laos has a relatively unsophisticated economy that is agriculture- and natural resource-based, although industry as share of GDP has been growing steadily in the last decade. The population of around 6 million people engages mostly in subsistence agriculture.

So far, Laos has been affected by the crisis less than other countries, because:

Seeing the financial crisis: What might contraction look like in Cambodia?

Submitted by Stéphane Guimbert on Tue, 2009-04-07 01:53

Declining revenue of tuk-tuk drivers in Cambodia shows even the informal sector isn't insulated.

Growth forecasts in Cambodia are generating a fair bit of confusion. Many simply question whether it is possible for GDP growth to be lower in 2009 than in the past 15 years.

The World Bank today launches its projection of a 1 percent contraction of the Cambodian economy. This is based on an analysis of available statistics and feedback from a range of economic actors. Yet, to most of my Cambodian friends, it remains hard to conceive.

It is true that "seeing" such a contraction will be difficult. Basically, what it means is that economic activity in 2009 will be pretty much the same as in 2008. So the fact that we continue to have traffic jams in Phnom Penh, see tourists at the Royal Palace, and hear construction machines in many residential areas is consistent with such a projection. What will change, though, is that incomes will not increase this year as fast as past years and it will also become more difficult for the 250,000 young people leaving school each year to find their first job. What also will be different is that with no growth in aggregate, there will be a proportion of those with a livelihood at the end of the year worse than at the beginning.