Asia and Pacific: Stabilizing and Outperforming Other Regions

May 2015

2015 APD REO


The economic outlook for Asia and Pacific is stable and robust, with growth expected to hold steady at 5.6 percent in 2015, easing slightly to 5.5 percent in 2016, according to the latest Regional Economic Outlook for Asia and Pacific, published on May 7, 2015.

Although Asia will remain the global growth leader, vulnerabilities associated with increased domestic and foreign debt are rising. Potential growth is likely to slow, reflecting weaker productivity gains, and the effects of aging populations and infrastructure bottlenecks in some countries.

The report finds that monetary and fiscal policy settings are broadly appropriate, but boosting resilience and potential growth remain top priorities, with structural reforms continuing to play a big role. The report also explores Asia’s role in global value chains and the factors affecting financial integration within Asia.


Front Matter

Chapter 1. Asia and Pacific’s Outlook: Still Leading Global Growth

  • Global Backdrop and Major Risks
  • Asia and Pacific: Main Themes for 2015
  • Is China Slowing to a More Sustainable Pace?
  • Will Japan’s Recovery Gather Steam?
  • India: A Bright Spot in the Global Economy
  • Outlook and Policy Challenges for Asia and Pacific Excluding China and Japan
  • Annexes

Chapter 2. Reaping the Benefits from Global Value Chains

  • Introduction and Main Findings
  • Key Stylized Facts
  • How Can Economies Increase GVC Participation?
  • How Can an Economy Capture a Bigger Slice of the GVC Pie?
  • Effect of Exchange Rate Changes within a GVC
  • Conclusions and Policy Implications

Chapter 3. Drivers of Financial Integration: Implications for Asia

  • Introduction and Main Findings
  • Regional Financial Integration in Asia: Recent Trends
  • Understanding the Drag on Deeper Regional Financial Integration: The Role of Home Bias
  • Drivers of Financial Integration
  • Implications for Asia



Chart Data 1.1 Asia’s Export Performance: What Is Holding It Back?
Chart Data 1.2 Low Inflation in Asia: What Role for Oil Prices and Exchange Rates?
Chart Data 1.3 The Rising Credit Intensity of Output within Asia
Chart Data 1.4 Financial Conditions in Asia: How Accommodative Are They?
Chart Data 1.5 Spillovers to Asian Countries from Surges in Global Financial Market Volatility
Chart Data 1.6 What’s Going On in China’s Housing Market?
Chart Data 1.7 The Impact of Yen Depreciation on Japanese and Korean Exports: Is This Time Different?
Chart Data 1.8 Female Labor Force Participation in Japan: Is the Glass Half Full?
Chart Data 1.9 Cyclone Pam and Natural Disasters in the Pacific Island Countries
Chart Data 1.10 House Price Dynamics in Asia: A New Vulnerability?
Chart Data 1.11 Financial Spillovers in Asia: Evidence from Equity Markets
Chart Data 1.12 Has the Neutral Rate Fallen in Asia?
Chart Data 1.13 Monetary Policy Transmission in Emerging Asia: The Role of Banks
Chart Data 1.14 Climate-Economy Relationship in India
Chart Data 2.1 What Underlies Economic Complexity?
Chart Data 2.2 Case Study: Comparing Electronics Value Chains in Korea and Japan
Chart 2.3 Assessing Drivers of GVC Participation and Moving Up in GVCs
Chart 3.1 The Benefits and Risks of Further Regional Financial Integration in Asia
Chart Data 3.2 Does Financial Integration Enhance Financial Inclusion?


1.1 Asia: Real GDP
2.1 Exchange Rate Competitiveness in Final Goods versus GVCs


Chart Data 1.1 Real GDP Growth
Chart Data 1.2 Asia: Contribution to World Real GDP Growth
Chart 1.3 Oil Price Windfall: Impact on the Oil Trade Balance in 2015
Chart Data 1.4 Impact of Oil Price Decline on Macro Forecasts
Chart Data 1.5 Selected Asia: Inflation Decomposition of the CPI Basket
Chart Data 1.6 Selected Asia: Exchange Rates
Chart Data 1.7 Asia: Commodity Exports and Exchange Rate Movements
Chart Data 1.8 Selected Asia: Change in Exchange Rates and Reserves
Chart Data 1.9 Asia: Exchange Market Pressure Index
Chart Data 1.10 Selected Asia: Credit by All Providers to the Nonfinancial Private Sector
Chart Data 1.11 Asia: Equity and Bond Funds––Monthly Net Flows
Chart Data 1.12 Asia: Financial Account Balances
Chart Data 1.13 Selected Asia: Foreign Exchange Reserve Accumulation
Chart Data 1.14 Selected Asia: Private Sector Credit Growth
Chart Data 1.15 Asia: Sovereign Bond Yields
Chart Data 1.16 Selected Asia: Real Policy Rates
Chart 1.17 Asia Financial Stability Heat Map
Chart Data 1.18 Asia: Output Gap versus Credit Gap
Chart Data 1.19 Asia: Nonfinancial Corporate Sector Potential Vulnerabilities, 2014
Chart Data 1.20 Selected Asia: Debt-to-Equity Ratio for All Firms (both listed and unlisted fi rms)
Chart Data 1.21 Stock of Outstanding Bonds and Syndicated Loans in Foreign Currency—End-2014 (Percent of GDP)
Chart Data 1.22 Stock of Outstanding Bonds and Syndicated Loans in Foreign Currency—End-2014 (Percent of Reserves)
Chart Data 1.23 Selected Asia: Tier 1 Capital Ratio—Latest
Chart Data 1.24 China: Potential Growth Decomposition
Chart Data 1.25 China: Growth Slowing Down
Chart Data 1.26 China: Social Financing Stock
Chart Data 1.27 Asia: Stock Markets
Chart Data 1.28 Japan: Real GDP Growth and Inflation
Chart Data 1.29 India: Current Account, Fiscal Balance, and Inflation
Chart Data 1.30 Asia: Changes in Real GDP at Market Prices
Chart Data 1.31 Selected Asia: Exports to Major Destinations
Chart Data 1.32 Selected Asia: Contributions to Projected Growth
Chart Data 1.33 Asia: Contributions to Change in Headline Inflation in 2014
Chart Data 1.34 Selected Asia: Real GDP Growth and Output Gap
Chart Data 1.35 Asia: Headline Inflation
Chart Data 1.36 Selected Asia: Policy Rate Actions
Chart Data 1.37 Asia: Estimated Central Bank Reaction Functions
Chart Data 1.38 Selected Asia: Cyclically Adjusted Fiscal Balance
Chart Data 1.39 Asia: Real GDP Growth
Chart 2.1 A Hypothesized “Smiley-Shaped” Relationship between Value Added and Global Value Chain Position
Chart Data 2.2 Participation in Global Value Chains: 1995 versus 2012
Chart Data 2.3 Domestic Value-Added Share in Global Value Added
Chart Data 2.4 Upstreamness or Downstreamness
Chart Data 2.5 Tariffs and GVC Participation
Chart Data 2.6 Illustrative Impact: GVC Participation
Chart Data 2.7 Assessing the Link between Moving Up Global Value Chains, Upstreamness, Economic Complexity, and Tariffs
Chart Data 2.8 Research and Development Expenditure and Upstreamness
Chart Data 2.9 Illustrative Impact of 1 Percent Appreciation in the Real Effective Exchange Rate on GVC-Related Trade
Chart Data 2.10 Average Exchange Rate Variability: 2000–14
Chart Data 3.1 Asia: Foreign Direct Investment
Chart Data 3.2 Asia: Foreign Portfolio Investment and Foreign Portfolio Investment Assets
Chart Data 3.3 Sources of Portfolio Inward Investment
Chart Data 3.4 Destinations of Portfolio Outward Investment
Chart Data 3.5 Sources of Foreign Bank Claims on Asia
Chart Data 3.6 Asia: Foreign Bank Claims
Chart Data 3.7 Interest Rate Dispersion Comparison
Chart Data 3.8 Home Bias Index across Regions
Chart Data 3.9 Illustrative Impact of Explanatory Variables on Financial Integration
Chart Data 3.10 Capital Account Openness Index
Chart Data 3.11 Allowed Foreign Ownership of Equity in the Banking Sector
Chart Data 3.12 Foreign Bank Penetration
Chart Data 3.13 Difference in Investor Protection Index
Chart Data 3.14 Difference in Contract Enforcement Index
Chart Data 3.15 Difference in Resolving Insolvency Index


Chart 1.1 Asia: Real GDP
1.2 Asia: Consumer Prices
1.3 Asia: General Government Balances
1.4 Asia: Current Account Balance

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