This morning I attended the launch of the World Bank’s East Asia and Pacific Regional Update. For the first time, the launch came directly from Sydney; previously it was launched in Washington and presented in Australia by videoconferencing. This twice yearly snapshot of economic development in East Asia was presented by Jeff Gutman (WB Vice President for East Asia and the Pacific) and Dr Homi Kharas (WB Chief Economist for East Asia and the Pacific). The title was ‘solid growth, new challenges’ and pretty much covered the message: a lot of optimism, but also some challenges (although I wouldn’t call them new). Here are a few highlights.
Economic growth in East Asia and the Pacific (EAP) remains high. Southeast Asian countries show a rather steady growth of 5 to 6%, while China’s growth slowly decreases but remains high at more than 9%. Japan slowly recovers with a growth of 2.8%.
An interesting observation was the increased regionalization in terms of trade. Exports in East Asia were more than before aimed at other EAP countries. Obviously, the expansion of the Chinese market plays a substantial role in this, but also the economic recovery of Japan.
East Asia is also slowly catching up in terms of patents. The amount of patents in EAP is high for countries like Japan, Singapore, Hong Kong and Korea, even if corrected for income and population. Malaysia and China’s innovation are approximately what could be expected with their level of income. Indonesia, the Philippines and Thailand however, are still underperforming.
One of the challenges ahead was also an important topic in the previous update of November 2005: the avian flu. This problem mainly needs a combination of international and local efforts in order to be contained. Although the economic consequences of an avian flu outbreak could be severe, it “did not keep the World Bank’s Chief Economist awake at night.”
Some extra attention was also given to a more long term threat: global warming. With the rise of China, the CO2 emissions rise accordingly. At the same time, East Asia and the Pacific are very vulnerable to global climate changes, especially since most of their economic activity is in coastal cities.
Interesting quote this morning: “What we worry about most is not having anything to worry about”