Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
Diversity in performance across subregions
The East and North-East Asian subregion comprises
China; the Democratic People’s Republic of Korea;
Hong Kong, China; Japan; Macao, China; Mongolia;
and the Republic of Korea. As a result of the
continued economic slowdown in the United States
and Europe, all the economies in the East and
North-East Asian subregion, except Japan, registered
lower growth rates in 2012. However, GDP growth
in China was still among the highest in the world.
The situation was different in Japan. The country first
recovered during the early part of 2012 as a result
of the reconstruction activities that were launched in
the wake of the massive earthquake and tsunami
that occurred in March 2011, but then Japan fell into
recession. However, it achieved positive growth for
the year as a whole. Inflationary pressures abated in
most economies in the subregion, enabling monetary
and fiscal policies to function in support of economic
activity. On the external side, most of these economies
continued to achieve current account surpluses, except
Mongolia, which had a large current account deficit.
Foreign direct investment inflows weakened in 2012
as global uncertainty built up. Contingent upon a
mild global recovery, the outlook for the subregion in
2013 is generally positive. Policymakers are conscious
of the need to adapt the broad normative and
institutional environment in a way that is conducive
to more inclusive and sustainable development. In
these circumstances it is important to maintain the
focus on social policy reform and the transition to
a greener economy.
The North and Central Asian subregion covers
Armenia, Azerbaijan, Georgia, Kazakhstan,
Kyrgyzstan, the Russian Federation, Tajikistan,
Turkmenistan and Uzbekistan. Although economic
performance in the subregion remained robust at
the beginning of 2012, several of these economies
began to feel the impact of a deteriorating external
economic environment in the latter part of the year.
In addition, severe weather conditions in some
countries, which resulted in a poor harvest, contributed
to some slowdown in the economic growth of the
subregion in 2012. A number of the economies in the
subregion are net energy exporters; with oil prices
expected to remain relatively firm, growth rates are
projected to remain more or less the same in 2013.
Consumer price inflation eased in 2012, mainly due
to the decline in global food and fuel prices. Budget
balances deteriorated in most of the economies due
to increased public spending. On the external side,
current account surpluses of the economies that are
net energy exporters contracted, and the current
account deficit of the net energy importers widened.
Owing to slower economic growth in Kazakhstan
and the Russian Federation, the remittances of
overseas workers from these countries to net energyimporting
countries in the subregion started slowing.
Economies in the subregion continue to face serious
challenges owing to their reliance on commodity
exports, making them highly exposed to the external
economic environment. Further diversification of these
economies will always remain a challenge. As most
of these countries are landlocked, issues of trade
and transit are highly relevant for them. Further
development of transport infrastructure will continue
to remain a high priority in these countries.
The Pacific subregion includes the Cook Islands,
Fiji, Kiribati, the Marshall Islands, the Federated
States of Micronesia, Nauru, Palau, Papua New
Guinea, Samoa, Solomon Islands, Tonga, Tuvalu
and Vanuatu. Australia and New Zealand are also
part of this subregion. The Pacific island developing
economies face unique challenges, including small
population size, poor resource base (except in a
few exceptional cases), remoteness from their more
developed trading partners, frequent natural disasters
and adverse impacts from global climate change.
These constraints make it difficult for them to achieve
high economic growth rates on a sustained basis.
The growth of these economies generally slowed
in 2012. Papua New Guinea, the resource-rich
and largest economy among the developing island
States in the subregion, continued to achieve high
levels of economic growth, but at a slightly lower
rate than in 2011. Deceleration in growth of these
economies is expected to continue in 2013. With
slower growth, inflationary pressures also subsided
70