Regional Economic Outlook: Asia and Pacific, October 2010: Consolidating the Recovery and Building Sustainable Growth

Asia and Pacific, October 21, 2010

Source details

Canonical URL: Regional Economic Outlook: Asia and Pacific, October 2010: Consolidating the Recovery and Building Sustainable Growth

Press Release headline: IMF Sees Strong Growth in Asia Continuing, Further Policy Tightening Needed.
One year after the deepest recession in recent history, Asia is leading the global recovery.
The region rebounded swiftly during 2009 and in the first quarter of 2010.
In the near term the region is expected to continue leading the global recovery.
In the medium term, the global crisis has highlighted the importance for Asia of ensuring that private domestic demand becomes a more prominent engine of growth.

Executive Summary
I. Moving to Sustainable Growth: Risks and Challenges
- A. Recent Developments and Emerging Pressures
- B. Economic Outlook
- C. Risks
- D. Policy Challenges
II. Inflation Dynamics in Asia
- A. Introduction
- B. Explaining Inflation Dynamics in Asia
- C. A Closer Look at Inflation Dynamics in China and India
- D. Conclusions and Policy Implications
- Appendix 2.1. Global VAR
- Appendix 2.2. Structural VAR (SVAR)
III. Investment and Rebalancing in Asia
- B. Investment Trends in Asia
- C. What Drives Investment in Asia?
- D. Policy Implications: How Can Asia Facilitate Rebalancing Through Investment?
- E. Summary
- Appendix 3.1. Firm-Level Analysis
IV. Low-Income Countries and the Pacific Islands
- B. Postcrisis Fiscal Adjustment in Asian Low-Income Countries
- C. Sri Lanka: At a Crossroads
- D. Mongolia: A Remarkable Turnaround
- E. Fiscal Challenges for Compact Countries—Marshall Islands, Micronesia, and Palau

Inflation analysis:
- Persistence of Food Price Inflation (Box 2.1)
- Use of Global VAR and Structural VAR (Appendix 2.1 and 2.2)
- Country-specific NKPC estimates for China and India (Tables 2.2–2.5)
Investment and rebalancing:
- Firm-level analysis and determinants of private investment spending (Appendix 3.1; Tables 3.1–3.4)
- Role of infrastructure on private investment (Table 3.2)
- Corporate sector leverage and investment composition (Figures 3.10, 3.7)
Financial and fiscal risk monitoring:
- Financial Conditions Index for Asia (Box 1.3)
- Fiscal impulses and projected general government gross debt (Figures 1.22, 1.50)
- Gross Public Debt, 2009 (Figure 1.43)
Special country and regional studies:
- Sri Lanka: Gross Official Reserves, Inflation and GDP Growth (Tables/Figures in Chapter 4)
- Mongolia: Real GDP and Mineral Exports (Figures 4.6–4.7)
- Fiscal situations for Compact countries and Pacific Island economies (Tables 4.8–4.12)

Near-term:
- Monitor and, where appropriate, tighten macroeconomic policies as recovery continues (implied by Press Release: Further Policy Tightening Needed).
Medium-term:
- Promote a shift toward private domestic demand as a more prominent engine of growth to achieve sustainable rebalancing.
Inflation and monetary policy:
- Analyze inflation dynamics including food and commodity shocks, and calibrate policy responses informed by country-level NKPC and VAR analyses.
Investment and structural policies:
- Facilitate rebalancing through policies that support private investment, including infrastructure, corporate sector reforms, and improving fundamentals highlighted in firm-level and aggregate investment analyses.
Fiscal policy in low-income and small island economies:
- Implement postcrisis fiscal adjustment and reforms tailored to country circumstances, with attention to grant dependence and public wage and revenue structures in Pacific Island economies.

Regional Economic Outlook: Asia and Pacific, October 2010: Consolidating the Recovery and Building Sustainable Growth