Executive Summary: ESCAPís Economic and Social Survey of Asia and the Pacific 2012
The V-shaped recovery from the depths of the 2008-09 global financial crisis proved to be short-lived as the world economy entered a second stage of the crisis in 2012 with a sharp deterioration in the global environment with the accentuation of the euro zone debt crisis and a continued uncertain outlook for the economy of the United States of America. As forewarned by the Economic and Social Survey of Asia and the Pacific 2012, the growth rate of Asia-Pacific developing economies declined to 7.0% in 2011 from a robust rate of 8.9% achieved in 2010. The growth rate of the economies of the region is forecast to decline further to 6.5% in 2012 with a slackening demand for the region’s exports in advanced economies and as a result of higher costs of capital.
The growth slowdown will be felt across different subregions depending upon the extent of their global integration. The growth rate in East and North-East Asia is forecast to slow to 7.1% in 2012 (from 7.6%). North and Central Asia is forecast to experience relatively moderate slowdown, to 4.3%, in 2012, benefiting from the high prices for energy. The Pacific island developing economies are forecast to experience lower aggregate growth in 2012 of 5.7%, due mainly to lower growth in Papua New Guinea, although a number of other countries are likely to maintain fairly stable performance. The South and South-West Asia subregion is forecast to see a slowdown to 5.8% in 2012 from 6.7% in 2012, although this will be more on account of monetary tightening than the global slowdown. Although South-East Asia, is an open subregion with many of its economies affected severely by the state of the global economy, it is forecast to see a slight increase in growth in the subregion as a whole, to 5.2% in 2012, due to the strong recovery of growth in Thailand following the floods in 2012. With the growth slow down, inflation in Asia and the Pacific is forecast to moderate from 6.0% in 2012 to 4.8% in 2012.
Despite the slowdown, Asia and the Pacific will remain the fastest growing region globally and an anchor of stability in the world economy. The region’s growth engines are projected to continue to grow at robust rates. China is forecast to grow at 8.6% in 2012 after decelerating from the 9.2% rate achieved in 2012. India, on the other hand, is expected to improve its growth performance from 6.9% to 7.5% in 2012 as moderating inflation would allow an unwinding of the cycle of monetary tightening during the current year, thus unleashing growth impulses. With its continued dynamism, the Asia-Pacific region has begun to act as a growth pole for other developing regions, namely Latin America and Africa, helping them to reduce their dependence on low-growth developed economies as South-South trade becomes an important trend. Click here to download the rest of the executive summary.