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

MACROECONOMIC PERFORMANCE AND POLICY CHALLENGES AT THE SUBREGIONAL LEVEL CHAPTER 2
sector helped to offset softer manufacturing activities.
Employment growth, however, decelerated from 3.6%
in 2011 to 1.4% in 2012.
The economy of the Lao People’s Democratic
Republic continued to expand rapidly, driven
largely by gold and copper mining and hydropower
investments. The economy grew by 8.3% in 2012,
at a similar pace to that in 2011. Economic growth
was also supported by the rising contribution of
garments and tourism, as well as a recovery in
agricultural production following the floods in 2011.
Public construction activities for the Asia-Europe
meetings held in November 2012 also made
contributions. More importantly, services such as
telecommunications have seen a steady increase
in recent years, in line with rising incomes and
growing domestic demand. In early 2013, the country
became the newest member of the World Trade
Organization. Just as important as gaining better
market access as a result of accession to WTO
is the provision of incentives for and the anchoring
of domestic reforms.
In early 2013,
Lao People’s Democratic Republic
became the newest member of
the World Trade Organization
Despite its high trade exposure, Malaysia maintained
a solid economic growth rate of 5.6% in
2012, up slightly from 5.1% in 2011. Domestic
demand expanded robustly, offsetting poor
export performance. Private consumption growth
accelerated on buoyant job markets, low inflation and
government initiatives, such as civil servant salary
hikes and one-off cash assistance to lower-income
households. Similarly, fixed investment growth surged
to a multi-year high pace on public infrastructure
spending and firm private investment benefiting from
the ongoing structural reform agenda to achieve
high-income country status by 2020 (Vision 2020). In
contrast, the export of goods and services decreased
from mid-2012, but much more modestly than the
magnitude recorded during the peak of the global
financial crisis in late 2008 and early 2009.
The economy of Myanmar is expected to expand
by 6.3% in 2012, up from 5.5% in 2011. 8 Natural
gas exports and higher investment in the energy
sector continued to fuel growth. The lifting of
sanctions by the European Union and the United
States following recent political reforms, together
with domestic economic reforms, is opening up
new opportunities for the economy, although large
infrastructure bottlenecks and skill gaps remain to
be addressed. The new foreign investment law
and special economic zones are expected to help
attract investment in labour-intensive manufacturing
activities. At the same time, the Government has
cut military spending to allow room for increased
education, health and infrastructure spending, while
expanding credit to the agricultural sector and rural
areas. An overarching challenge is to rapidly expand
electricity generation and supply; currently less than
20% of population has access to electricity.
Following a weak 3.7% economic growth rate in
2011, the Philippine economy recorded a respectable
growth rate of 6.6% in 2012. The buoyant expansion
was led by domestic demand, although the export
of goods and services also appeared to hold
up reasonably well. Steady private consumption
was supported by historically low interest rates,
firm employment conditions and stable inflation.
Household incomes also benefited from largely
resilient remittance flows, but appreciating domestic
currency has somewhat reduced the value in
domestic currency terms. Gross fixed capital
formation increased rather solidly in line with the
improving investment climate. Public consumption
also stepped up, with a slightly higher share in
GDP in 2012 relative to the past several years.
Employment growth, however, decelerated from
2.4% in 2011 to 1.3% in 2012. Higher job creation
in the formal sector remains a key challenge for
inclusive growth.
The economy of Singapore decelerated markedly
as a result of the waning global economy. Real
output growth dipped to 1.3% in 2012 from 5.2%
in 2011. On a sequential basis (quarter-on-quarter,
seasonally-adjusted), growth performance receded
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