Asia Pacific Economic Outlook - July 2011 |
The July 2011 edition of the Asia Pacific Economic Outlook gives a near-term outlook for China, India, the Philippines, Singapore and South Korea.
CHINA: Policymakers have lately allowed the currency to appreciate at a faster pace, suggesting that the fight against inflation may be taking precedence over exchange rate concerns. Longer term, the government aims to reduce consumer saving and thereby increase consumer spending; all part of a plan for the consumer to drive economic growth.
INDIA: Inflation continues to stymie India’s growth ambitions. Already-high inflation could worsen quickly if the monsoons fail. In addition, rising oil prices and government expenditures are likely to keep the fiscal deficit high. The central bank stressed that its primary concern is price stability and that it is willing to sacrifice growth in order to rein in inflation.
PHILIPPINES: Remittances from overseas workers continued to prop up consumer spending despite high inflation. Going forward, consumer spending will likely strengthen as the recently announced minimum wage hikes percolate down to disposable income. On the other hand, a surge of capital inflows poses some downside risk. Overall, the economy is poised for moderate economic growth.
SINGAPORE: A strong performance in 2010 was followed by a favorable start to 2011. As a result, Singapore’s growth estimates were recently revised upward. The manufacturing and services sectors will likely drive growth. Furthermore, tight labor market conditions are likely to persist and wages will probably remain elevated, pointing to strong domestic demand.
SOUTH KOREA: South Korea’s trade volume set an all-time record in 2011 and the future looks equally promising. As a result, the export sector is likely to be the main driver of GDP growth. Rising inflation and a mounting interest burden due to high household debt could dampen domestic consumption. Overall, the outlook for South Korea is positive.
Asia Pacific Economic Outlook - July 2011
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