Asia and Pacific
Asia and Pacific: Stabilizing and Outperforming Other Regions
May 2015
Reports and Related Links:
The economic outlook for Asia and Pacific is stable and robust, with growth expected to hold steady at 5.6 percent in 2015, easing slightly to 5.5 percent in 2016, according to the latest Regional Economic Outlook for Asia and Pacific, published on May 7, 2015.
Although Asia will remain the global growth leader, vulnerabilities associated with increased domestic and foreign debt are rising. Potential growth is likely to slow, reflecting weaker productivity gains, and the effects of aging populations and infrastructure bottlenecks in some countries.
The report finds that monetary and fiscal policy settings are broadly appropriate, but boosting resilience and potential growth remain top priorities, with structural reforms continuing to play a big role. The report also explores Asia’s role in global value chains and the factors affecting financial integration within Asia.
Contents
Front Matter
Chapter 1. Asia and Pacific’s Outlook: Still Leading Global Growth
- Global Backdrop and Major Risks
- Asia and Pacific: Main Themes for 2015
- Is China Slowing to a More Sustainable Pace?
- Will Japan’s Recovery Gather Steam?
- India: A Bright Spot in the Global Economy
- Outlook and Policy Challenges for Asia and Pacific Excluding China and Japan
- Annexes
Chapter 2. Reaping the Benefits from Global Value Chains
- Introduction and Main Findings
- Key Stylized Facts
- How Can Economies Increase GVC Participation?
- How Can an Economy Capture a Bigger Slice of the GVC Pie?
- Effect of Exchange Rate Changes within a GVC
- Conclusions and Policy Implications
Chapter 3. Drivers of Financial Integration: Implications for Asia
- Introduction and Main Findings
- Regional Financial Integration in Asia: Recent Trends
- Understanding the Drag on Deeper Regional Financial Integration: The Role of Home Bias
- Drivers of Financial Integration
- Implications for Asia
References
Boxes
| Chart | Data | 1.1 | Asia’s Export Performance: What Is Holding It Back? |
| Chart | Data | 1.2 | Low Inflation in Asia: What Role for Oil Prices and Exchange Rates? |
| Chart | Data | 1.3 | The Rising Credit Intensity of Output within Asia |
| Chart | Data | 1.4 | Financial Conditions in Asia: How Accommodative Are They? |
| Chart | Data | 1.5 | Spillovers to Asian Countries from Surges in Global Financial Market Volatility |
| Chart | Data | 1.6 | What’s Going On in China’s Housing Market? |
| Chart | Data | 1.7 | The Impact of Yen Depreciation on Japanese and Korean Exports: Is This Time Different? |
| Chart | Data | 1.8 | Female Labor Force Participation in Japan: Is the Glass Half Full? |
| Chart | Data | 1.9 | Cyclone Pam and Natural Disasters in the Pacific Island Countries |
| Chart | Data | 1.10 | House Price Dynamics in Asia: A New Vulnerability? |
| Chart | Data | 1.11 | Financial Spillovers in Asia: Evidence from Equity Markets |
| Chart | Data | 1.12 | Has the Neutral Rate Fallen in Asia? |
| Chart | Data | 1.13 | Monetary Policy Transmission in Emerging Asia: The Role of Banks |
| Chart | Data | 1.14 | Climate-Economy Relationship in India |
| Chart | Data | 2.1 | What Underlies Economic Complexity? |
| Chart | Data | 2.2 | Case Study: Comparing Electronics Value Chains in Korea and Japan |
| Chart | 2.3 | Assessing Drivers of GVC Participation and Moving Up in GVCs | |
| Chart | 3.1 | The Benefits and Risks of Further Regional Financial Integration in Asia | |
| Chart | Data | 3.2 | Does Financial Integration Enhance Financial Inclusion? |
Tables
| 1.1 | Asia: Real GDP | ||
| 2.1 | Exchange Rate Competitiveness in Final Goods versus GVCs |
Figures
| Chart | Data | 1.1 | Real GDP Growth |
| Chart | Data | 1.2 | Asia: Contribution to World Real GDP Growth |
| Chart | 1.3 | Oil Price Windfall: Impact on the Oil Trade Balance in 2015 | |
| Chart | Data | 1.4 | Impact of Oil Price Decline on Macro Forecasts |
| Chart | Data | 1.5 | Selected Asia: Inflation Decomposition of the CPI Basket |
| Chart | Data | 1.6 | Selected Asia: Exchange Rates |
| Chart | Data | 1.7 | Asia: Commodity Exports and Exchange Rate Movements |
| Chart | Data | 1.8 | Selected Asia: Change in Exchange Rates and Reserves |
| Chart | Data | 1.9 | Asia: Exchange Market Pressure Index |
| Chart | Data | 1.10 | Selected Asia: Credit by All Providers to the Nonfinancial Private Sector |
| Chart | Data | 1.11 | Asia: Equity and Bond Funds––Monthly Net Flows |
| Chart | Data | 1.12 | Asia: Financial Account Balances |
| Chart | Data | 1.13 | Selected Asia: Foreign Exchange Reserve Accumulation |
| Chart | Data | 1.14 | Selected Asia: Private Sector Credit Growth |
| Chart | Data | 1.15 | Asia: Sovereign Bond Yields |
| Chart | Data | 1.16 | Selected Asia: Real Policy Rates |
| Chart | 1.17 | Asia Financial Stability Heat Map | |
| Chart | Data | 1.18 | Asia: Output Gap versus Credit Gap |
| Chart | Data | 1.19 | Asia: Nonfinancial Corporate Sector Potential Vulnerabilities, 2014 |
| Chart | Data | 1.20 | Selected Asia: Debt-to-Equity Ratio for All Firms (both listed and unlisted fi rms) |
| Chart | Data | 1.21 | Stock of Outstanding Bonds and Syndicated Loans in Foreign Currency—End-2014 (Percent of GDP) |
| Chart | Data | 1.22 | Stock of Outstanding Bonds and Syndicated Loans in Foreign Currency—End-2014 (Percent of Reserves) |
| Chart | Data | 1.23 | Selected Asia: Tier 1 Capital Ratio—Latest |
| Chart | Data | 1.24 | China: Potential Growth Decomposition |
| Chart | Data | 1.25 | China: Growth Slowing Down |
| Chart | Data | 1.26 | China: Social Financing Stock |
| Chart | Data | 1.27 | Asia: Stock Markets |
| Chart | Data | 1.28 | Japan: Real GDP Growth and Inflation |
| Chart | Data | 1.29 | India: Current Account, Fiscal Balance, and Inflation |
| Chart | Data | 1.30 | Asia: Changes in Real GDP at Market Prices |
| Chart | Data | 1.31 | Selected Asia: Exports to Major Destinations |
| Chart | Data | 1.32 | Selected Asia: Contributions to Projected Growth |
| Chart | Data | 1.33 | Asia: Contributions to Change in Headline Inflation in 2014 |
| Chart | Data | 1.34 | Selected Asia: Real GDP Growth and Output Gap |
| Chart | Data | 1.35 | Asia: Headline Inflation |
| Chart | Data | 1.36 | Selected Asia: Policy Rate Actions |
| Chart | Data | 1.37 | Asia: Estimated Central Bank Reaction Functions |
| Chart | Data | 1.38 | Selected Asia: Cyclically Adjusted Fiscal Balance |
| Chart | Data | 1.39 | Asia: Real GDP Growth |
| Chart | 2.1 | A Hypothesized “Smiley-Shaped” Relationship between Value Added and Global Value Chain Position | |
| Chart | Data | 2.2 | Participation in Global Value Chains: 1995 versus 2012 |
| Chart | Data | 2.3 | Domestic Value-Added Share in Global Value Added |
| Chart | Data | 2.4 | Upstreamness or Downstreamness |
| Chart | Data | 2.5 | Tariffs and GVC Participation |
| Chart | Data | 2.6 | Illustrative Impact: GVC Participation |
| Chart | Data | 2.7 | Assessing the Link between Moving Up Global Value Chains, Upstreamness, Economic Complexity, and Tariffs |
| Chart | Data | 2.8 | Research and Development Expenditure and Upstreamness |
| Chart | Data | 2.9 | Illustrative Impact of 1 Percent Appreciation in the Real Effective Exchange Rate on GVC-Related Trade |
| Chart | Data | 2.10 | Average Exchange Rate Variability: 2000–14 |
| Chart | Data | 3.1 | Asia: Foreign Direct Investment |
| Chart | Data | 3.2 | Asia: Foreign Portfolio Investment and Foreign Portfolio Investment Assets |
| Chart | Data | 3.3 | Sources of Portfolio Inward Investment |
| Chart | Data | 3.4 | Destinations of Portfolio Outward Investment |
| Chart | Data | 3.5 | Sources of Foreign Bank Claims on Asia |
| Chart | Data | 3.6 | Asia: Foreign Bank Claims |
| Chart | Data | 3.7 | Interest Rate Dispersion Comparison |
| Chart | Data | 3.8 | Home Bias Index across Regions |
| Chart | Data | 3.9 | Illustrative Impact of Explanatory Variables on Financial Integration |
| Chart | Data | 3.10 | Capital Account Openness Index |
| Chart | Data | 3.11 | Allowed Foreign Ownership of Equity in the Banking Sector |
| Chart | Data | 3.12 | Foreign Bank Penetration |
| Chart | Data | 3.13 | Difference in Investor Protection Index |
| Chart | Data | 3.14 | Difference in Contract Enforcement Index |
| Chart | Data | 3.15 | Difference in Resolving Insolvency Index |
Annexes
| Chart | 1.1 | Asia: Real GDP | |
| 1.2 | Asia: Consumer Prices | ||
| 1.3 | Asia: General Government Balances | ||
| 1.4 | Asia: Current Account Balance |
