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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 »

GDP

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.

Far from home in China: conversations with migrant workers searching for opportunities in urban centers

Submitted by Joe Qian on Fri, 2009-10-30 10:23
Quality Control Inspector Jiang Peng walks on scaffolding along the foundation of the water treatment facility.

While traveling through China recently, I had an opportunity to visit the Shanghai Urban Environment project in the emergent suburban district of Qingpu and spoke to a number of workers responsible for the implementation and completion of the project.

As with many infrastructure and urban development projects in China, the speed and magnitude can be astonishing, with hundreds of employees working around the clock to ensure timely completion. Work on the facility runs 24 hours a day, 7 days a week with construction workers from all over China contracted to work and live onsite until its completion in 2011. Once finished, it will improve water service, coverage, and waste water management in the region which will be essential for sustaining the increasing population and living standards.

A quick look at 60 years of China's development

Submitted by James I Davison on Thu, 2009-10-08 16:18

Last week’s 60th anniversary celebrations marking the founding of the People’s Republic of China seemed to generate a lot of coverage and interest on news and social media websites. Business magazine Fast Company used the occasion to consider 15 different development-related statistics – comparing then to now.

Most of the figures are striking, and the graphic’s triangles illustrate how rapid and staggering the changes have been in China in just six decades. Interesting data (although the magazine doesn't specify its sources) in the infographic include:

  • The average life expectancy has increased from 35 to 73 years old.
  • The rate of illiteracy was 80 percent in 1949 and is 9.1 percent now.
  • The enrollment rate for primary-school children went from 20 percent to 99.3 percent.

Take a closer look at the chart here. (Hat tip to Cool Infographics.)

Are China’s banks having a "good crisis"?

Submitted by James Seward on Wed, 2009-10-07 15:17
The crisis certainly hit China hard, but the spillover to banks has been minimal thus far. Photo courtesy of randylane under a Creative Commons license.

The story of the current financial crisis is well-known now and much has been written.  Indeed, we’re now at the point where many observers are indicating that the crisis is now at an end.  It would seem that the immediate financial sector impacts are leveling off, but in many countries the economic recovery will likely take a long time.  However, a number of emerging markets have come out of the crisis in relatively stable shape.  China is the most prominent example.  In fact, one might say that China is having a “good crisis” in certain ways as it has lifted its prominence – it is the one large country seen as leading the world out of this global crisis.  The same applies for China’s financial system given that many of its banks are now the largest in the world and (at least on the surface) posting strong performance. 

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.

Showing vs. Telling: map shows half the world represented by 5 percent GDP

Submitted by James I Davison on Wed, 2009-07-29 14:27

It always seems to be the case that by simply writing or saying something, you can hardly get the same point across as by presenting it in a visual way. For example, it’s one thing to say, “three billion people (a little less than half the world’s population) comprise the bottom 5 percent of global GDP contributors.” But as the Strange Maps blog points out, it’s a little more eye-opening to show a map with those countries completely missing.

I’m not sure this map accomplishes much more than to illustrate a single interesting point – unlike the SHOW World animated maps we wrote about earlier this year or the popular WorldMapper Collection, both of which put several data sets in a visual format.

The map does, however, highlight the interesting fact that most of the countries represented are either in Southeast Asia or Africa. Check it out here.

Green shoots in the burned forest: Signs of recovery for Thailand?

Submitted by Frederico Gil Sander on Thu, 2009-07-16 15:45

Are these green shoots? This question, usually the primary concern of pandas (or panda look-alikes), is now on everyone’s mind as observers try to identify the early signs of recovery out of the global financial crisis, which, like a forest fire, spread rapidly and caused great damage to the world’s economies and the Thai economy in particular. It now appears that the fire has been put out (with much liquidity…), but the green shoots emerging in the burned forest remain very fragile as hot spots remain and the risks of the fire re-igniting are not negligible.

China: what long-term policies and reforms are needed to sustain growth?

Submitted by Louis Kuijs on Tue, 2009-06-30 13:15

In a previous blog I summarized our views on China’s growth prospects, developed while writing the World Bank’s recent China Quarterly Update economic report. We think that China is likely to continue to see respectable growth in a difficult global environment. At this important juncture for China and the world economy, what is the upshot of this for policymaking?

At any point in time, governments need to work on short-term macroeconomic policies and on more medium- and long-term policies. There are trade-offs. More attention to short-term policies typically means less attention to the policies and reforms that are important for the medium and long term. We think that, given that China has already put in place a forceful short-term stimulus that seems effective in keeping growth respectable, China can put more emphasis on the structural reforms to promote continued, sustainable growth.

There continues to be a lot of discussion in China whether GDP growth will reach the government target of 8 percent this year, and whether the government should put in place more stimulus measures, typically presumed to be the kind of infrastructure-oriented stimulus that characterizes the package already in place.

I think it would not be a good idea to add more traditional, infrastructure-oriented fiscal stimulus in 2009. Why?