China keeps East Asia and Pacific afloat
(5 November 2009 – Asia) The World Bank has released the latest East Asia and Pacific update detailing the depth of their dependence on China.
The World Bank thinks the economic rebound in East Asia and the Pacific has been swift, but take China out of the equation and the regional picture is not so rosy.
The report titled, ‘transforming the rebound into recovery’, says that the large and timely fiscal stimulus spending in most East Asian and Pacific countries, along with a powerful process of inventory restocking now underway, has driven the rebound in the region and contributed to confidence in the global pick up.
The developments in the East Asia and Pacific region remain influenced by China, where the projected increase in Gross Domestic Product (GDP) in 2009 will offset three quarters of the decline in the GDP’s of the US, the Eurozone and Japan.
East Asia excluding China is expected to grow one percent in 2009, a slower rate than expected for South Asia, the Middle East and North Africa.
With the projected growth in China of 8.4 percent this year and the country’s domestic demand racing ahead of global demand, countries exporting consumer durables, electronic components and raw materials to China have felt the positive flow-on effect.
The World Bank is also projecting growth of 6.7 percent in 2009 for East Asia and the Pacific and 7.8 percent for next year.
Vikram Nehru, chief economist, World Bank said that risks to a sustainable recovery remain.
Mr Nehru added that some governments in the region will have the fiscal space to sustain fiscal stimulus until recovery is on a firmer footing.
The time to begin removing monetary accommodation may come earlier however, especially given concerns about asset price bubbles, he concluded.
The report titled, ‘transforming the rebound into recovery’, says that the large and timely fiscal stimulus spending in most East Asian and Pacific countries, along with a powerful process of inventory restocking now underway, has driven the rebound in the region and contributed to confidence in the global pick up.
The developments in the East Asia and Pacific region remain influenced by China, where the projected increase in Gross Domestic Product (GDP) in 2009 will offset three quarters of the decline in the GDP’s of the US, the Eurozone and Japan.
East Asia excluding China is expected to grow one percent in 2009, a slower rate than expected for South Asia, the Middle East and North Africa.
With the projected growth in China of 8.4 percent this year and the country’s domestic demand racing ahead of global demand, countries exporting consumer durables, electronic components and raw materials to China have felt the positive flow-on effect.
The World Bank is also projecting growth of 6.7 percent in 2009 for East Asia and the Pacific and 7.8 percent for next year.
Vikram Nehru, chief economist, World Bank said that risks to a sustainable recovery remain.
Mr Nehru added that some governments in the region will have the fiscal space to sustain fiscal stimulus until recovery is on a firmer footing.
The time to begin removing monetary accommodation may come earlier however, especially given concerns about asset price bubbles, he concluded.
Subscribe