A report on Reports: What the ADB, IMF and World Bank say about the Asian economy
Since the start of April, the Asian Development Bank (ADB), World Bank and International Monetary Fund (IMF) have released their respective economic reports that showcase their forecasts for Asia in 2014 and over the next 2 years.
Serving as an important and useful resource, they are often quoted and reused by corporates and media alike. The data and analysis these reports present serves as a useful backdrop for narrating or evidencing the current growth of Asian economies and the outlook over the next two years.
ADB’s annual Asian Development Outlook provides an analysis of economic performance for the past year and offers forecasts for the next 2 years for 45 economies in Asia and the Pacific, according to the description on their site. The East Asia Pacific Economic Update also serves as a comprehensive review of the region’s economies and is published twice a year. IMF’s World Economic Outlook report, also published twice a year, presents analyses and projections by IMF staff economists on the global economic development in the short and medium term horizon
Here’s a look at some of the key findings from the reports:
Developing Asia can continue on their growth trajectory
• World Bank: East Asia and Pacific (EAP) will continue to be the world’s fastest growing region this year, with the region’s gross domestic product (GDP) expected to expand at a more stable and sustainable pace of 7.1 percent from in 2014 to 2016.
(World Bank’s definition of EAP comprises of China, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Cambodia, Lao People’s Democratic Republic (PDF), Mongolia, Myanmar, Timor-Leste, Fiji, Papua New Guinea, Solomon Islands and other island economies in the Pacific.)
• ADB: Developing Asia should expect steady growth extending to the forecast horizon, edging up to 6.2 percent in 2014 and to 6.4 percent in 2015.
(ADB’s definition of Developing Asia refers to the 45 developing member countries of the Asian Development Bank.)
• IMF: For Asia as a whole, growth is expected to accelerate modestly, from 5.2 percent in 2013 to about 5.5 percent in both 2014 and 2015.
Growth in China is expected to moderate
• World Bank: Growth in China is expected to ease to 7.6 percent in 2014 (and 7.5 percent in 2015) from its current pace of 7.7 percent in 2012 and 2013.
• ADB: Growth in China is expected to be 7.5 percent this year, slower than the forecast of 7.7 percent and will likely lose momentum further to 7.4 percent in 2015 for several reasons: tightened credit growth, rising wages, currency appreciation, and the continual shift in the government's development priorities away from quantity towards quality.
• IMF: In China, growth recovered somewhat in the second half of 2013 and should remain robust this year, moderating only marginally to 7.5 percent, as accommodative policies remain in place.
Some other key factors:
Global economy on the recovery path
• World Bank: Global growth is projected to accelerate to 3 percent this year, up from 2.4 percent last year. Expected growth in the high-income economies is also projected to increase to 2.14 percent in 2014, from 1.3 percent in 2013.
• ADB: Growth momentum is building in the major industrial economies. Combined GDP growth in the US, the euro area and grew by a collective 1 percent in 2013 and this figure is expected to increase to 1.9 percent in 2014 and 2.2 percent in 2015.
• IMF: Global growth to average 3.6 percent in 2014 and to rise to 3.9 percent in 2015, up from 3.0 percent in 2013.
Fed’s decision to scale back QE did not impact the region as negatively as imagined
• World Bank: Developing EAP successfully navigated the stalled global economic recovery in the first half of 2013, and the expectations of a scaling back of quantitative easing in the second half, to grow by 7.2 percent in 2013 – only marginally lower than the 7.4 percent in 2012.
• ADB: GDP in developing Asia expanded by 6.1 percent in 2013, the same pace as 2012, even with reversals of foreign capital flows knocking the region’s equity markets and currencies in midyear. Most markets have so far taken the ending of US quantitative easing in their stride, but a shock to global financial markets from changes in US monetary policy cannot be ruled out.
China’s reform and slowdown can pose risk to the region
• World Bank: As in the case of spillovers from the advanced economies, a slower-than-expected growth in China will hurt the region mainly through the trade channel.
• ADB: The outlook already envisages some slowing of growth in the PRC. However, if efforts there to curb credit expansion are too abrupt and excessively undermine growth, the PRC’s deeper slowdown could drag down prospects for its trade partners.
• IMF: A sharper than envisaged slowdown in China – for instance, from the implementation of structural reforms – would have significant spillovers for the rest of the region, especially in economies linked to the regional supply chain and commodity exporters.
Further thoughts on promoting growth in the region:
• World Bank: Over the longer term, structural reform can increase developing East Asia’s underlying growth potential and enhance market confidence.
China has already begun a series of structural reforms in finance, market access, labor mobility and fiscal policy to increase efficiency of growth and boost domestic demand. The rest of the region’s developing countries could also benefit from structural reforms, such as facilitating international trade and promoting foreign direct investment, especially in the services sector.
• ADB: Widening income gaps in developing Asia strengthen the case for government response and fiscal policy that fosters equality of opportunity can help tackle the region’s rising inequality
• IMF: In addition to tackling near-term vulnerabilities, Asia should also continue to push ahead with structural reforms to enhance medium-term prospects.
The three reports portray a relatively upbeat tone of growth for developing Asia and the global economy which will, without a doubt, set the tone for the rest of the year. While Asian markets appears to be more robust, risk factors such as monetary tapering in the United States and other threats to growth are very much present. In any case, it will not be surprising to see these statistics and projections used in various ways to support marketing and communication efforts for the financial community at largecomments powered by Disqus