World Bank East Asia and Pacific Economic Update 2011, Volume 2 : Navigating Turbulence, Sustaining Growth

Growth in developing East Asia in the first half of 2011 remained strong, but continued to moderate, mainly due to weakening external demand. Global growth was also affected by supply shocks from geopolitical disturbances in the Middle East, supply chain disruptions following the earthquake and tsunami in Japan, and a slower-than-expected recovery of private demand in crisis-affected countries. More recently, uncertainties over fiscal sustainability in the U.S. and sovereign debt in the Euro zone fed financial volatility and affected investor and consumer sentiment. Domestic demand in East Asian economies has also been softening, driven by the normalization of fiscal and monetary policy, although it remained robust and the largest contributor to growth. We project that real Gross Domestic Product(GDP) in developing East Asia will increase by 8.2 percent in 2011 (4.7 percent excluding China), while growth will slow to 7.8 percent in 2012. Risks are on the downside, however. Based on the still robust current growth projections, the proportion of people living on less than US$2 a day in developing East Asia is expected to decrease to about 24 percent in 2011, down two percentage points from 2010, and an estimated 38 million people are projected to move out of poverty. However, poverty reduction efforts would be hampered in the event of another sudden increase in food prices against a backdrop of slowing income growth. In the short- to medium-term, East Asia's growth prospects are constrained by global uncertainty and by the impact of natural disasters. The slow progress towards resolution of debt problems in the Euro zone intensified investors' concerns over global growth and stability. As capital flowed out of emerging markets into relatively safer havens, portfolio investments reversed and stock markets lost value in East Asia. Markets remain jittery, even after the Euro zone countries agreed on a solution for the sovereign debt and banking problems. Fiscal and financial consolidation in the Euro zone is likely to reduce growth in Europe, and could lead to renewed financial outflows from East Asia as banks shore up their capital coverage. Credit outstanding from European banks to developing East Asia amounts to US$427 billion, or six percent of GDP. But high reserves and current account surpluses protect most East Asian countries against the impact of possible renewed financial stress.

Bibliographic Details

Main Author:	World Bank
Format:	Publication biblioteca
Language:	en_US
Published:	Washington, DC 2011-11
Subjects:	Aggregate Demand, Agricultural Cooperatives, asset holdings, asset prices, bailout, Balance of Payments, bank balance sheets, Bank credit, Bank debt, bank lending, banking crisis, banking sector, banking system, basis points, bond flows, bond funds, bond markets, Bond Spreads, bonds, borrowing costs, broad money, Capital Account, capital flow, capital flows, capital inflows, Capital market, capital outflows, capital requirement, cash reserve, cash transfers, CDS, central bank, central bank bills, central banks, Central Securities Depository, checks, collateral, collateral for loans, commercial banks, commodities, Commodity, commodity price, consumer goods, Consumer price index, Copyright Clearance, Copyright Clearance Center, Credit Default, Credit Default Swap, credit default swaps, credit flows, credit growth, Credit outstanding, credit ratings, creditors, Currency, current account surpluses, Debt burdens, debt crisis, debt data, debt defaults, debt instruments, debt service, deficits, derivatives, derivatives markets, developing countries, Development Bank, disbursement, domestic bond, domestic bond markets, domestic capital, domestic capital markets, domestic currency, domestic government bond, emerging economies, emerging markets, Emerging Portfolio Funds, equipment, equities, equity flows, equity holdings, equity markets, exchange rate, Exchange Rates, expenditures, Export Growth, exporter, exporters, external borrowing, financial crisis, financial flows, financial management, Financial Market, financial markets, financial risks, Financial Stability, financial stress, financial volatility, fiscal deficit, fiscal deficits, Fiscal policy, flow of credit, food price, food prices, Foreign direct investment, Foreign direct investments, Foreign Exchange, Foreign Exchange Reserves, foreign investor, Foreign investors, global economy, Global Financial Stability, Government Bond, government bond market, Government Bond Yields, government bonds, government debt, government deficit, government funding, government guarantees, government securities, government spending, Gross domestic product, growth rates, holding, holdings, human capital, income, income growth, income taxes, incomes, inflation, inflationary pressures, informal lenders, instrument, interest rate, interest rates, International Bank, international banks, international market, International Settlements, inventories, investment climate, investment flows, investment rates, investor base, liability, liquidity, loan, local corporations, local currency, local government, local governments, Low-income countries, macroeconomic stabilization, Market capitalization, market indices, Market Price Indices, market prices, market value, market volatility, maturity, Middle-income countries, Monetary Fund, Monetary policy, money market, mortgage, mortgages, mutual funds, natural disaster, natural disasters, negative shocks, Nonperforming Loans, open economies, output, pension, Portfolio, portfolio flows, portfolio holdings, portfolio inflows, Portfolio investment, portfolio investments, portfolio quality, potential investors, private investment, Public debt, public investment, public spending, real estate loans, real exchange rates, real interest, real interest rates, referendum, regulatory frameworks, remittance, Remittances, reserve requirements, reserves, return, Risk aversion, safety net, Securities, settlement, Short-term external debt, sovereign bond, sovereign bonds, sovereign debt, sovereign debt restructuring, sovereign issuers, sovereign risk, Stock Market, Stock Market Price, stock markets, Stocks, supply shocks, tax, telecommunications, trade balance, Trade finance, trading, transparency, treasury, treasury bonds, valuation, withdrawal, World Development Indicators,
Online Access:	http://hdl.handle.net/10986/14861
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