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The year 1949 has been one of significant developments in Asia and the Far East, including Japan. It may m ark the end of the first phase of the slow and painful post-war recovery paving the way for a more promising future. There has been an over-all improvement in the AFE region1 in mineral and industrial production as well as in transport and to a lesser extent in agricultural production, except in China where, on account of disturbed conditions, there was a setback. The deterioration in the Chinese situation, partly arrested towards the second half of the year, affects significantly the economic picture of the region, as China has 40 per cent of the population, 52 per cent of the land area, 33 per cent of the current rice production, and a large proportion of iron ore, coal and other mineral resources of the region. Also, the regional economic picture would have presented a greater improvement over 1948 were trade between India and Pakistan not virtually suspended over the currency dispute arising from the sterling devaluation towards the end of September. Inflationary factors which were a menace in 1948 have not only been arrested, but in a few countries the measures taken have brought about disinflationary conditions, if not actual deflation. The recession in late 1948 and early 1949 in the United States, which threatened to disrupt the price structure of some of the countries in the Far East, was fortunately short-lived, and prices and exports recovered. One of the most outstanding economic events for Asia, no less than for the rest of the world, was the devaluation of the pound sterling and the chain of devaluations of the currencies of most of the countries of the region; although it is too early to trace its full effects there can be little doubt of its having exerted a favourable influence on the general economic, trade and financial conditions of Asia.'
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Macroeconomic Policy and Financing for Development Division +66 2 288-1234 [email protected]