Except for the period of the 1997-1998 crisis, economic growth in Asia and the Pacific has been robust over the past two decades. The region’s real GDP nearly doubled between 1990 and 2007.

Since 1990 the world’s developing regions have benefited from accelerated economic growth. Asia and the Pacific has been one of the fastest growing – in 2007, GDP growth was 5.8 per cent, second only to Africa at 6.1 per cent. Asia and the Pacific is now one of the world’s most important sources of economic output: in 2007, it was responsible for 27.6 per cent of global output – 1.3 percentage points higher than in 1990 (shares calculated in current prices).

Figure 15.1 – Index of change in GDP, world regions, 1990-2007

Within Asia and the Pacific, the best performers have been the middle-income economies, In 2001 their growth rate was 4.9 per cent but in 2007 they had reached a remarkable 9.1 per cent. Low-income economies are also making progress, but at a slower pace. And compared with the middle-income economies, their momentum since 2004 appears to have slowed. The high-income economies have been growing more slowly: in most years since 1990 growth has been between 2 and 4 per cent.

Figure 15.2– Index of change in GDP, by income groupings of Asia-Pacific countries, 1990-2007

Some of the fastest growth has been in North and Central Asia – the result of high commodity prices and heavy public and private investment. In 2007, economies in the subregion grew on average by 8.4 per cent. The most rapid growth was in Azerbaijan (25.1 per cent), but GDP was also growing elsewhere: Georgia (12.4 per cent), Armenia (11.1 per cent), Turkmenistan (8.5 per cent), Kazakhstan (8.7 per cent), Kyrgyzstan (8.2 per cent), the Russian Federation (8.1 per cent), Tajikistan (7.8 per cent) and Uzbekistan (7.4 per cent).

Other subregions had mixed performances. In 2007, South and South-West Asia achieved a record 7.4 per cent GDP growth – though they ranged from Bhutan with a historically high rate of 22.4 per cent to Nepal where growth was only 2.5 per cent. South-East Asia too had large differences between the best and worst performers – from 16.2 per cent in Timor-Leste to 0.4 per cent in Brunei Darussalam. Similarly, in East and North-East Asia growth ranged from 27.3 per cent in Macao, China to 1.6 per cent in Democratic People’s Republic of Korea.

In the Pacific subregion aggregate GDP in 2007 was 3.8 per cent, though this was determined to a large extent by that of Australia. Among the small island States, however, there was significant variation. The tiny economy of Palau, achieved a record-breaking 55 per cent – the result of large inflows of external assistance and a tourist boom. In sharp contrast, in 2007 the economies of Tonga and Fiji both contracted by nearly 4 per cent – suffering respectively from civil disorder and a military coup which hampered their tourism sectors and severely affected the rest of their economies.

The least developed countries have performed fairly well. Since the mid-1990s especially, they have registered rising growth – 6.7 per cent in 2007. The pattern has been similar in the landlocked developing countries for which growth in 2007 was 10 per cent.

Commentary on economic growth in Asia and the Pacific would be incomplete without a separate focus on the region’s two giant economies. China alone contributes 20.1 per cent of the region’s GDP and in 10 of the past 18 years has recorded double-digit growth. India with 8.9 per cent of regional GDP has also had rapid growth particularly in recent years.

In assessing economic growth it is also important to consider trends in GDP growth per capita. In Asia and the Pacific the 2007 average was $2,603. While in global terms this is still a relatively low figure, the growth rate has been more rapid than in other global regions – 4.7 per cent in 2007, compared with 3.9 per cent in Latin America and the Caribbean, 3.7 per cent in Africa, 2.7 per cent in Europe, and 1.2 per cent in North America. In 2007, eight of the region’s economies reached double-digit growth in per capita income. In decreasing order these were: Palau; Macao, China; Azerbaijan; Bhutan; Georgia; Timor-Leste; Armenia; and China.

Figure 15.3 – GDP growth, Asia and the Pacific, 2007

Growth in per capita GDP is strongly influenced by population growth. In 2007, Africa’s GDP growth rate at 6.1 per cent was higher than the Asia-Pacific rate of 5.8 per cent and the 5.2 per cent in Latin America and the Caribbean. But, as
a result of its high population growth rate, Africa had the lowest per capita GDP growth rate of these three global regions.

In Asia and the Pacific a high proportion of GDP results from domestic investment. The proportion dropped several percentage points after 1997-1998 but has since returned to near pre-crisis levels. Indeed the baseline investment rates were so high that between 1990 and 2007 only the least developed countries and SAARC members managed to increase their share of domestic investment in GDP.

Figure 15.4 – Gross domestic investment, world regions, 1990-2007

Figure 15.5 – Gross domestic investment, selected Asia-Pacific country groupings, 1991-2007

To see which parts of the economy are contributing to economic growth, one can consider value added by sector. During 1990-2007 for Asia and the Pacific as a whole, the share of agriculture in value added declined from 9.5 to 8.1 per cent, that of industry grew from 37.6 to 39 per cent, while that of services remained stable at 52.9 per cent.

Except in the least developed countries of the region, industry has generally grown faster than agriculture. Indeed one of the most notable aspects of growth in Asia and the Pacific region has been the phenomenal growth in industry in the middle-income economies – which in value-added terms has made this the world’s most industrialized region.

Figure 15.6 - Value added by sector, the regions of the world, 2007

When assessing the significance of different sectors, however, it is important to look beyond value added and consider their contribution to employment. Agriculture may have only a small share of value added but it still employs the largest share of people and in many developing countries is critical for food security.

This Yearbook only covers economic growth up to 2007 which has generally been robust. During 2008, the global economic prospects changed rapidly. For a recent detailed analysis, see the Economic and Social Survey for Asia and the Pacific.