East Asia Update, October 2003 : From Cyclical Recovery to Long Run Growth
The region had already begun a cyclical recovery in 2002, but this was partially side-tracked by SARS - Severe Acute Respiratory Syndrome - and other shocks in early 2003. East Asian growth fell to only 3 percent in the second quarter of 2003. On b...
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| Format: | Serial |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/711751468032401775/From-cyclical-recovery-to-long-run-growth-regional-overview http://hdl.handle.net/10986/33503 |
| Summary: | The region had already begun a cyclical
recovery in 2002, but this was partially side-tracked by
SARS - Severe Acute Respiratory Syndrome - and other shocks
in early 2003. East Asian growth fell to only 3 percent in
the second quarter of 2003. On balance, though, the impact
of SARS was less than first feared, and growth projections
for 2003 remain unchanged, compared with six months ago. Far
from too little growth, China is in the midst of a powerful
boom that has policy makers looking for ways to cool the
pace of expansion in some sectors. On the other hand, export
growth in most East Asian countries, slowed in the summer,
and in some has yet to revive. These conflicting signals
obscure somehow the near term outlook, but, on balance,
prospects for East Asia are getting brighter. If the
momentum of reform can be maintained, the region should be
well placed to convert cyclical recovery into more
sustained, long run growth. There are four sets of reasons
for optimism: the global economy is improving, continued
strong growth in China is propelling a vast expansion in its
imports from the rest of East Asia, post-financial crisis
" fire-fighting " seems to be behind, with
domestic conditions in the region improving, and, the region
is becoming more comfortable with representative forms of
governance. However, two dangers deserve special attention:
international trade is the life blood of East Asia, but the
setback at the Cancun trade talks, might allow protectionist
interests to go on the offensive, causing long term damage
to the world trading system; and, within East Asia progress
on institutional, and governance reforms has been slow,
evidently hurting its competitive position in the world.
Several priority policies are suggested, namely prudent
macroeconomics, continued emphasis on strengthening
financial sector supervision and regulation, corporate
governance, and the supporting legal and judicial framework
for the financial, and corporate sectors, as well as
fostering the development of more diversified capital
markets, to better handle different kinds of risks. The
report also looks at the prospects for economic growth in
the region, its poverty incidence, and at a more supportive
international environment, pointing at improved confidence,
demand, and activity, underpinned by supportive monetary,
and fiscal policies adopted by many countries. Domestic
trends and policy challenges convey gradual improvements in
the financial sector, more active capital market
development, improved corporate governance, and political
transitions in several countries in the region. |
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