Singapore, March 21, 2011 – According to the World Bank’s twice-yearly economic update on the East Asia and Pacific region, real GDP growth in East Asia will settle to about 8 percent in 2011 and 2012 from about 9.6 percent in 2010. Growth in the region was surprisingly strong and broad based, with six countries in developing East Asia growing by 7 percent or more in 2010. Inflation has become the key short-run challenge for the authorities in the region, complicated by a surge in portfolio capital inflows and rapidly increasing food and commodity prices that hit low-income households disproportionately. The report also examines the following topics.
- The trend toward increasing intra-regional trade, with China a larger final consumer of regional product, is likely to continue. Tighter regional integration will further boost the international competitiveness of Developing East Asia while also providing an engine of growth that is relatively less dependent on the slow-growing high-income countries.
- Rising inequality is a matter for concern and could pose a challenge to future social stability. Ensuring equal access to education, improving connectivity between leading and lagging regions, and expanding targeted social services are some of the policy responses necessary to ensure inequality does not rise to levels that breed social exclusion and cut growth potential.
- A rapidly ageing population will slow growth rates unless its effects are offset by faster growth in productivity, larger fixed investment, increased participation in the work force of women, longer work lives, and policy adjustments that encourage productivity and help contain ageing-related fiscal costs.
- East Asia’s cities have helped support economic growth, but their full potential as the source of innovation and productivity is yet to be realized. Cities will need to become the true crucibles of innovation by exploiting the proximity of companies and workers, acting as knowledge exchanges, and providing capital for innovative but risky projects.
- The risks of climate change and natural disasters complicate East Asia’s quest for continuous rapid growth. The recent tragic earthquake in Japan and the subsequent tsunami are a stark reminder of the dangers from natural hazards and the key role of careful and thorough investments the authorities have made in seismic safety and emergency preparedness.
The East Asia and Pacific Economic Update is the comprehensive, twice-yearly review of the region’s economies prepared by the East Asia and Pacific region of the World Bank. The report contains key indicator tables for developing countries in the region, appendix tables covering economic output, poverty, and trade and financial indicators, and over 100 charts. These tables are also available in PDF and Excel files on the Open Data site (http://data.worldbank.org/data-catalog/eap-economic-update). The charts are available in a PDF file and will soon be available in Excel files as well.
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