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East Asia & Pacific Update - Ten Years After Asia's Financial Crisis
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| April 2007 |
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| East Asian economies are growing strong, but as they climb steadily to higher income levels, the next challenge is to avoid the "middle-income trap", says World Bank's semi-annual analysis of the region | | | | April 5, 2007 - Ten years on from the 1997 East Asian Financial Crisis and the region is far wealthier, has fewer poor people and a larger global role than ever before. People’s incomes are well beyond where they were before the crisis and in some countries, like China, Vietnam, Cambodia and Lao PDR, they’re growing at exceptional rates. Over 100 million people across East Asia have left the ranks of the extreme poor since 2000 and poverty continues to fall. Having grappled with the crisis and overcome many of the economic vulnerabilities that led to it, East Asia is fast becoming a middle income region. But with this incredible progress comes the next wave of tough challenges which could slow growth if not handled properly.  Full story More on East Asia & Pacific 10 Years After the Crisis (chapter 5) | Chapters: | | 1: Summary | Even as the region celebrates recovery from the 1997 financial crisis, new challenges are arising, which could slow or even derail growth if not properly handled. The report looks at these issues in a section on “Ten years after the crisis” (chapter 5).
Another challenge of staggering proportions that lies ahead is East Asian urbanization, which is the focus of a special section. These and other issues tackled in the report are summarized in this chapter. | | | | More (63kb pdf) | | | | 2: East Asia Regional Outlook | In terms of growth, the strong overall regional outcome for 2006 was dominated by China, but activity also expanded at energetic 8-10 percent rates in low income economies like Cambodia, Lao PDR, Mongolia and Vietnam. Some slowing in regional activity became apparent in the latter part of the year. The extent of the emerging US downturn is an important risk, but continued growth in Japan and Europe should provide some balance.
Regarding poverty, it is estimated that the number of poor people in East Asia & Pacific at the US$2 a day level fell to some 552 million in 2006 (29 percent of the population.) The reduction in poverty since 2001 has been even bigger than in the previous extended "boom" of 1991-96. The report looks at the effect that the region's policy reform efforts could have on poverty, and the new policy approaches that governments are taking to tackle this issue. | | | | More (83kb pdf) | | | | 3: The International and Regional Environment | The rotation in the balance of growth from the US to the rest of the world should help stabilize and begin a gradual adjustment in global macroeconomic imbalances in the US current account deficit. For East Asia this means a weakening in its important US export market.
Another key aspect of the turn in the global cycle is the continued gradual tightening of monetary policies in the developed world, which appear to be succeeding in curbing the incipient upturn in inflation in developed economies. Commodity prices also show signs of having reached a cyclical peak, with substantial declines in oil and some metals prices after the middle of 2006. This chapter also looks at China's influence on the region. | | | | More (240kb pdf) | | | | 4: Domestic Trends and Policy Changes | | The extraordinary scale of balance of payments inflows over the last 4-5 years is leading policy makers to put more emphasis on exchange rate flexibility. This is evidenced by China and Malaysia’s adoption of a more flexible exchange rate framework in mid 2005, and an increased pace of appreciation among several other economies. | | | | More (140kb pdf) | | | | 5: East Asia: 10 Years After the Crisis | A look at three key challenges facing East Asia 10 years after the crisis: - Maintaining high growth and sustainability;
- Poverty and inequality; and
- Managing vulnerability
and at some policy perspectives that can help address them. | | | | More (236kb pdf) | | | | Country Sections | | All files in pdf format | | |
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