Asia Pacific Economic Outlook - December 2010 |
The December 2010 edition of the Asia Pacific Economic Outlook gives a near-term outlook for China, Japan, Malaysia and South Korea.
China: China’s economy continues to expand at a more sustainable pace, but quelling inflationary pressures is proving to be an arduous task for policymakers. The latest rise in consumer prices is attributable to food inflation and a revived property market. Monetary policy has already been tightened and the currency is being left to slowly appreciate. The question remaining, then, is whether the government will stay the course or take new action on the monetary or currency fronts.
Japan: Does Japan stand at the crossroads of another “lost decade”? While the economy expanded for the fourth straight quarter, there are still several weak spots in the economic recovery. Export growth appears to have died down and a decline in wages does not bode well for consumer spending. While the reintroduction of quantitative easing is a welcome step, it remains to be seen whether Japan’s economic policies will enable it to escape the vicious cycle of deflation and depressed economic growth.
Malaysia: Following a strong recovery, the Malaysian economy appears to be stabilizing. Inflation is currently manageable and short-term interest rates are expected to remain steady. Robust domestic demand and increased capital expenditures provide a positive outlook. However, the appreciating currency and a shortage of skilled labor cast doubt over Malaysia’s export competitiveness vis-à-vis other countries in the region. The country’s GDP growth rate will likely range between 5 and 6 percent in 2011.
South Korea: South Korea’s export sector, together with private consumption, continues to be the main driver of GDP growth. The recently signed South Korea-EU free trade agreement also paves the way for improved business and investor confidence and will likely provide substantial support for economic growth in 2011. The central bank may pursue a tight monetary policy and resort to hiking interest rates gradually in order to keep a lid on inflation in the near term. Current estimates project GDP growth at 4 percent in 2011.
Asia Pacific Economic Outlook - December 2010
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