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

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
For both economies, the downside risks are mostly
external, particularly a recession in the euro zone and
a slowdown in China. While direct trade exposure
with the euro zone is limited and the banking sectors
remain generally healthy, the financial sector risk is
sizeable; it is a result of large foreign wholesale
funding to finance the current account deficit. This
risk could materialize if market confidence suddenly
plunges and systemic financial risks heighten. In
Australia, the significant role played by the mining
sector also highlights the country’s vulnerability to
terms of trade shocks. Large mining companies have
announced some scaling back in their investment
plans. Strong domestic currencies, particularly the
Australian dollar, would continue to add pressures
on overall export growth and competitiveness.
Nonetheless, both economies appear to have ample
room for macroeconomic policy responses, if needed.
SOUTH AND SOUTH-WEST ASIA
Growth slows due to both external and
domestic factors
Across South and South-West Asia, the economic
outlook shows a marked slowdown to a subregional
average of 4.1% in 2012, from 6.4% in 2011, partly
due to stalled export growth rates as a result of the
global economic slowdown (see table 2.4). Another
important component of the subregional slowdown is
a result of monetary tightening in the previous two
years aimed at curbing inflationary expectations. The
high incidence of natural disasters, such as floods
and droughts in different parts of the subregion,
and infrastructure bottlenecks, in particular power
shortages affecting the industry, also contributed to
slower growth. To the extent that these constraints
are home-grown, Governments that respond to these
policy challenges have the potential to substantially
improve their growth momentum, despite continued
global weaknesses.
The economies of the subregion have undergone
a structural transformation over time, moving from
being dominated by the agricultural sector to
becoming services-driven, with services contributing
over half of GDP and agriculture representing less
than one-fifth of GDP in most countries. Nepal,
whose agriculture sector was 38% of GDP in
2011, remains an exception. The industrial sector in
countries of the subregion has stagnated in terms
of its contribution to GDP since 1990, staying under
30% in most cases. (SRO-SSWA, 2012).
Table 2.4. Rates of economic growth and inflation in South and South-West Asian economies, 2011-2013
(Percentage)
Real GDP growth
Inflation a
2011 2012 b 2013 c 2011 2012 b 2013 c
South and South-West Asia d, e 6.4 4.1 5.1 9.4 11.1 8.5
Afghanistan 5.7 6.9 6.5 11.8 9.0 6.0
Bangladesh 6.7 6.3 6.0 8.8 10.6 7.5
Bhutan 11.7 8.5 8.4 8.3 13.5 7.8
India 6.2 5.0 6.4 8.4 10.0 7.0
Iran (Islamic Republic of) 4.0 -0.9 0.8 21.5 25.2 21.8
Maldives 7.0 3.4 4.3 11.3 10.9 8.3
Nepal 3.8 4.5 4.0 9.6 8.3 7.5
Pakistan 3.0 3.7 3.5 13.7 11.0 8.5
Sri Lanka 8.0 6.2 6.5 6.7 7.6 7.3
Turkey 8.6 3.2 3.8 6.5 8.9 7.6
Source: ESCAP, based on national sources.
a Changes in the consumer price index.
b Estimates.
c Forecasts (as of 30 March 2013).
d GDP figures at market prices in United States dollars in 2011 (at 2000 prices) are used as weights to calculate the subregional growth rates.
e The estimates and forecasts for countries relate to fiscal years. The fiscal year referred to as 2011 in the table is defined as follows: from 1 April
2011 to 31 March 2012 in India; from 21 March 2011 to 20 March 2012 in Afghanistan and the Islamic Republic of Iran; from 1 July 2010 to 30 June
2011 in Bangladesh and Pakistan; and from 16 July 2010 to 15 July 2011 in Nepal.
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