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Will China’s economic slowdown affect its reforms?

Bingjie Hu's picture
Also available in: 中文

The latest macroeconomic data released by China’s National Bureau of Statistics (NBS) on April 18 suggest that China’s economic growth has moderated in the first quarter of 2014. GDP growth has decelerated from 7.7 percent (year-over-year) in the last quarter of 2013 to 7.4 percent (year-over-year) in the first quarter of 2014.

On a sequential basis, the quarter-on-quarter seasonally adjusted growth slowed from 1.7 percent in Q4 last year to 1.4 percent in Q1 2014.

The deceleration in the first quarter of this year is in line with World Bank expectations (see our latest East Asia Economic Update) (Figure1).

Figure 1: Official growth data on the demand side reflect subdued export growth and a moderation in investment growth. Consumption led growth in the first quarter of 2014, contributing 5.7 percentage points to growth, followed by investment, contributing 3.1 percentage points. Net exports dragged down growth by 1.4 percentage points.

Many economists speculate that the weakening trend in growth may put more pressure on the government to implement more and stronger growth supportive fiscal and monetary policies, following the stimulus measures unveiled recently that include accelerated expenditures on railway construction and social housing, as well as tax breaks for small businesses.

Indonesia’s investment in flux

Alex Sienaert's picture
Also available in: Bahasa Indonesia

Can Indonesia’s economy move from a situation of investment in flux to an investment influx? This is one of the questions posed by the World Bank’s March 2014 edition of the Indonesia Economic Quarterly.

Why is Indonesia’s investment growth in flux? First, there has been a slowdown in fixed investment, due to lower terms of trade and tighter external financing conditions. This has helped narrow Indonesia’s external imbalances.

Second, while foreign direct investment—an important source of investment financing—has remained solid so far, the rapid growth of FDI inflows seen in recent years shows signs of plateauing.

Third, Indonesia remains reliant on external financing from portfolio investment inflows. These have surged in recent months, but they can be volatile.

Finally, recent policy developments have increased regulatory uncertainties. Add to that the usual difficulty of predicting policy ahead of elections, which may impact on investment of all kinds.

Given uncertain prospects for global investment flows to major emerging market economies like Indonesia, the good news is that Indonesia’s external balances are adjusting. The current account deficit shrank significantly in the fourth quarter of 2013, to $4.0 billion, or 2% of GDP. This is a welcome reduction from the record high of $10.0 billion in the second quarter of 2013—that’s 4.4% of GDP. The stock market rallied, gaining 9% in local currency terms, bond yields fell, and the Rupiah climbed back by 7% against the USD, year-to-date, recouping some of last year’s significant losses. Banking and portfolio inflows also rose in the final quarter of 2013*.

But some caution is warranted. The adjustment has been narrowly based on tighter monetary policy and currency depreciation over the second half of 2013, and slower investment growth. Indonesia remains vulnerable to a renewed deterioration of global market conditions.

Investasi yang tak menentu di Indonesia

Alex Sienaert's picture
Also available in: English

Dapatkah ekonomi Indonesia keluar dari keadaan investasi yang tak menentu? Ini adalah salah satu pertanyaan yang diajukan dalam laporan Perkembangan Triwulanan Perekonomian Indonesia dari Bank Dunia edisi bulan Maret 2014.

Mengapa pertumbuhan investasi Indonesia tak menentu? Pertama, terdapat perlambatan dalam investasi tetap, karena turunnya kondisi perdagangan dan lebih ketatnya kondisi pembiayaan luar negeri.

Kedua, sementara investasi asing langsung (FDI)—sumber pembiayaan investasi yang penting—masih tetap kuat sejauh ini, laju pertumbuhan aliran masuk FDI yang tercatat pada beberapa tahun terakhir menunjukkan tanda-tanda mendatar.

Ketiga, Indonesia tetap bergantung kepada pembiayaan luar negeri dari aliran masuk modal investasi portofolio. Aliran itu telah meningkat pada beberapa bulan terakhir, namun dapat bersifat volatil.

Akhirnya, perkembangan kebijakan terakhir telah meningkatkan ketidakpastian peraturan. Hal itu menambah kepada sulitnya memperkirakan kebijakan menjelang pemilu, yang dapat berdampak kepada seluruh jenis investasi.

Dengan ketidakpastian prospek aliran investasi global ke ekonomi-ekonomi pasar berkembang seperti Indonesia, kabar baiknya adalah bahwa neraca eksternal Indonesia sedang melakukan penyesuaian. Defisit neraca berjalan menyusut secara signifikan pada kuartal terakhir tahun 2013 menjadi 4,0 miliar dolar AS, atau 2 persen dari PDB. Penurunan ini merupakan hal yang menggembirakan karena defisit pernah mencapai catatan tertinggi sebesar 10,0 miliar dolar AS pada kuartal kedua tahun 2013—yang merupakan 4,4 persen dari PDB. Pasar saham kembali naik, dengan mencatat peningkatan sebesar 9 persen dalam mata uang lokal, imbal hasil (yield) obligasi turun, dan Rupiah menguat sebesar 7 persen terhadap dolar AS, selama tahun berjalan, yang menutup sebagian penurunan yang signifikan pada tahun lalu. Aliran masuk modal portofolio dan perbankan juga meningkat pada kuartal penutup tahun 2013*.

Namun sejumlah hal perlu diwaspadai. Sejauh ini penyesuaian itu terutama berdasarkan pada kebijakan moneter yang lebih ketat dan depresiasi valuta selama paruh kedua tahun 2013, dan—seperti telah disinggung—melambatnya pertumbuhan investasi. Indonesia tetap rawan terhadap kemungkinan penurunan kembali kondisi pasar dunia.

Indonesia’s “continuing adjustment”

Alex Sienaert's picture

2013 has been a year of adjustment for Indonesia’s economy.  In the recent edition of the Indonesia Economic Quarterly report, the flagship publication of the World Bank Indonesia office, we asked the questions: what are the drivers of this adjustment and how should policy respond?

Minh bạch tài sản ở Việt Nam – Cần hành động mạnh mẽ và quyết liệt hơn

Huong Thi Lan Tran's picture

Available in English

Nếu bạn hỏi ai đó là điều gì hấp dẫn anh hay chị đến với Bangkok, bạn sẽ thường nghe câu trả lời đó là những món ăn đậm đà gia vị ngon tuyệt vời, những người Bangkok vui nhộn và hiều khách và một thành phố sống động kỳ lạ luôn tràn ngập ánh sáng mặt trời. Nhưng điều gì nữa đã đưa gần 40 chuyên gia trong lĩnh vực phòng chống tham nhũng từ 15 quốc gia trong khu vực Châu Á – Thái Bình Dương, từ Bộ phát triển quốc tế Anh, từ các cơ quan của Liên hợp quốc và từ Ngân hàng thế giới, đến với Bangkok cuối tháng 3 vừa qua? Đó là sự quan tâm học hỏi xem việc kê khai tài sản công chức ở các nước trên thế giới được thực hiện như thế nào và làm thế nào để kê khai tài sản trở thành một công cụ hữu hiệu hơn trong phòng chỗng tham nhũng.

Cuộc hội thảo khu vực về minh bạch tài chính (minh bạch hóa tài sản) đã được Ban liêm chính thị trường tài chính và Sáng kiến thu hồi tài sản bị đánh cắp (Stolen Asset Recovery Initiative (StAR)) của Ngân hàng thế giới tổ chức. Hội thảo này đã tạo ra cơ hội để chuyên gia các nước tham dự chia sẻ thông tin về thực hiện kê khai tài sản trong khu vực công của mỗi quốc gia, từ các quốc gia đã xây dựng hệ thống kiểm soát việc kê khai tài chính tương đối phát triển như Hàn Quốc và Thái Lan, hay các hệ thống mới được xây dựng như Đông Timor, và các hệ thống đã đạt được môt số kết quả nhất định như của Việt Nam và Trung Quốc. Các đại biểu đã nhiệt tình chia sẻ kinh nghiệm của mình, những khó khăn mà họ gặp phải và mong muốn được học hỏi lẫn nhau. Đối với Việt Nam, cùng với việc đánh giá 5 năm thực hiện Luật phòng chống tham nhũng, có một số thông điệp bổ ích có thể được nghiên cứu và áp dụng. 

World Bank opens largest set of development data --for free and in several languages

Claudia Gabarain's picture

Big news: the World Bank has launched an open data site with more than 2,000 financial, business, health, economic and human development statistics. Until now, most of this had been available only to paying subscribers. Not only that, but the site and indicators are also available in French, Spanish, and Arabic --with 330 indicators initially, but set to grow.

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.