News / Asia

Three Questions: World Bank Report on Asia

Asian stock market
Asian stock market
Les Carpenter

Most economies in East Asia and the Pacific are doing quite well these days, with many engaged in a rather robust recovery.  However, in a new update report this week from the World Bank called "Robust Recovery, Rising Risks" the bank notes that output in the region has recovered to levels that prevailed before the global financial crisis.  The Update cautions though, that large capital inflows into many of these economies could lead to higher inflation and worsening asset bubbles.  

In its report update, it would seem the World Bank, is lowering its outlook for growth next year.  We asked the co-writer of the report, World Bank Chief Economist for the East Asia and Pacific region, Vikram Nehru, if that was the case?

"Actually we haven't lowered our outlook.  What we've basically reflected in our outlook is the fact that in 2010, the rebound in East Asia from the crisis (the global financial crisis) was, in fact in some countries, growth was extremely rapid.  What we're seeing now in the second half of 2010 is a gradual decline in growth as excess capacity is used up, new investments are needed.  So, what we're seeing is a return to normalized growth patterns, something that is going to be much more sustainable.  And that is what we're expecting in 2011, too.  That is, arrival at a more sustainable growth rate in the region, so it's not actually a decline or reduction in the outlook."

China's economy has been booming and now the World Bank is predicting a slowing or at least a return to something closer to normal.    If China is returning to normal, why do you think they made the move at this time to raise interest rates?


"First of all we are projecting that for this year China's growth will be at about 9.5 percent and 8.5 percent next year.  That's still a pretty smart growth rate by any standards and in line with China's past performance.  In recent months, in fact over the past year or so, there has been some concern in China about overheating in the economy and the real estate market and in other financial assets.  Inflation is beginning to creep-up.  Now, we can't be absolutely sure what was in the minds of the policy makers behind this interest rate increase, but I suspect that the main reason is to try and put a further dampener on inflation and inflationary expectations.  This was an unexpected move, so clearly there is some concern with the authorities on what's happening in terms of asset prices and the asset price bubble.  You know, in September, just this last month, there was an uptick in property prices in China which went against the trend of gradual decline in the stabilization of property prices.  So, it's possible that this could have been the concern behind this latest move."


You say the there is a problem with capital flows, a problem in a number of countries in East Asia.  Is this an indicator of what may lie ahead?


"It's very much an indicator of what's ahead.  What we have seen is this huge expansion in global liquidity lapping at the shores of developing East Asian countries.  We expect this increase in liquidity is going to be here to stay for some time as the advanced countries, and in particular the United States, struggles to reignite growth and to stabilize their economies.  So, I think, in many of the East Asian countries we are seeing a rise in capital inflows, we're seeing appreciating exchange rates and we're seeing the emergence once again of asset price increases which are not too worrisome at this stage, but they bear very close watching.   Now, provided the authorities take appropriate action as the Chinese authorities seem to have done, then I think these inflationary pressures can be contained.  But, this is something we're going to have to watch very closely going forward."

You May Like

Australia Knights Prince Philip, Sparking National Outrage

Abbott's surprise reintroduction of knights and dames in the country's honors system last year drew criticism that he was out of touch with national sentiment More

SAG Award Boosts 'Birdman' Oscar Hopes

Individual acting Oscars appear to be sewn up: SAG awards went to artists who won Golden Globes: Julianne Moore, Eddie Redmayne, Patricia Arquette, J.K. Simmons More

Katy Perry Lights Way for Super Bowl's Girl Power Moment

Pop star's selection to headline US football championship's halftime show extends NFL's trend of selecting artists who appeal to younger viewers More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Zoo Animals Show Their Artistic Sidesi
X
June Soh
January 23, 2015 10:03 PM
The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Zoo Animals Show Their Artistic Sides

The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Progress, Some Areas of Disagreement in Cuba Talks

U.S. and Cuban officials are reporting progress from initial talks in Havana on re-establishing diplomatic ties. U.S. Assistant Secretary of State (for Western Hemisphere Affairs) Roberta Jacobson said while there was agreement on a broad range of issues, there also are some “profound disagreements” between Washington and Havana. VOA State Department correspondent Pam Dockins has the story.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid