Policymakers to focus on growth over inflation
World Bank report predicts further slowdown in developing East Asia, but with opportunities for local banks as European lenders consolidate credit to boost capital. November 22, 2011 | Peter HoflichA World Bank report released today sees China as representing nearly half of the economic growth of developing East Asia, which includes Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, Papua New Guinea, the Philippines, Thailand, Timor-Leste, Vietnam and some Pacific island states. The report sees real GDP increasing 8.2% in 2011, but this would be 4.7% if China is excluded. Both figures have fallen steadily since Q1 2010, when the ex-China figure was close to 9%. Tighter monetary policy, the withdrawal of fiscal stimulus in the region and slower expansion in demand in developed countries are blamed in the report for the slowdown. So far, intra-regional trade has also not stepped in to properly fill the trade gap created by diminished demand from developed markets, and a 20-year trend of de-coupling trundles along. “The direct dependence of developing East Asia on Japan, the EU and the US has been coming down, from over 60% of total trade 20 years ago to 47%, but earlier analysis shows that there’s a lot of inter-regional trade that should be indirectly attributed to external demand,” says Bert Hofman, the World Bank’s chief economist for East Asia and the Pacific. With production networks in East Asia processing items that in the end find themselves in the EU or the US, the net effect is that exporting to developed markets has not come down dramatically in 20 years. The report notes that European banks still have a significant exposure to developing East Asia, and the most recent numbers show an increase in exposure. China is the largest net recipient at $260 billion, while second-placed Malaysia has the highest European bank borrowings as a percentage of GDP at 27%. According to Hofman, “European banks have reduced their exposure to developed economies, but increased it to developing economies, with Asia the most rapidly-growing, developing East Asia is quite large. There is a total exposure of credit of about $460 billion, or ... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Asia Pacific, Capital & Strategic Issues, Government Finance, Industry Outlookasia pac,Capital & Strategic Issues,Government Finance,Industry Outlook, Asia Pacific,Capital & Strategic Issues,Government Finance,Industry Outlook, , Capital Marketscapital, Capital Markets, Keywords:World Bank, Bert Hofman, Credit Consolidation, Capital Boost, GDP World Bank, Bert Hofman, Credit Consolidation, Capital Boost, GDP
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