Press Release
2008 Economic Outlook for East Asia
This economic outlook aims to faithfully reflect both theory and reality, by using a “macro-econometric model” - a method of analysis that maintains consistency with both economic and statistical theory - as well as links with IDE country specialists, who observe the current affairs of the economies they focus on, and also overseas local research institutes in the economies surveyed.
ABSTRACT
External Conditions
(1) The sub-prime mortgage financial crisis is likely to head toward resolution in the latter half of 2008, and its effect on the real economy of the U.S. is expected to be limited. In 2008, the economies of the U.S., Japan and Europe will slow.
(2) Due to the uncertainty in the financial market, investment funds are flowing into the commodities markets. In the latter half of 2008, these funds are forecast to return to the financial market, and the price of crude oil for 2008 as a whole to hover at approximately 80 dollars per barrel.
(3) Asian currencies are appreciating following the movement away from the dollar. It is assumed that this trend will continue in 2008.
(4) There will be little room for a continued fall in the price of IT-related products, which decreased in 2007.
The East Asian Economies in 2007
(1) The Chinese economy is predicted to grow by 11.5%, accelerating from 2006, led by continued solid investment and exports. The inflation rate of general prices is predicted to be 3.4%.
(2) The Asian NIEs have shown a general tendency for slow-growing external demand to give way to domestic demand as the support for the economy. The combined growth rate of the four NIEs as a whole in 2007 is predicted to be 5.4%, a rate 0.1 percentage point lower than in 2006. The combined inflation rate of general prices is predicted to be 1.4%.
(3) Among the ASEAN 5, the Indonesian economy has been buoyed by a recovery of investment, and the economy of Thailand has been influenced by the stagnation of domestic private demand caused by the chaotic political situation. The economies of Malaysia and the Philippines have been underpinned by domestic demand, while the Vietnamese economy has been fueled by the expansion of the industrial and service sectors. The combined growth rate of the ASEAN 5 as a whole in 2007 is predicted to be 6.0%, a rate 0.4 percentage point higher than in 2006. The combined inflation rate of general prices for the ASEAN 5 is predicted to be 5.0%.
(4) Boosted by the accelerating growth in the Chinese economy and ASEAN 5, the East Asian economy as a whole in 2007 is predicted to accelerate to 8.7%. The combined inflation rate of general prices for the East Asian economy as a whole is predicted to be 3.1%.
Economic Forecasts for East Asia in 2008
(1) The Chinese economy, led by domestic demand, is forecast to grow by 10.6% in 2008, posting a double-digit rate for the sixth consecutive year. The inflation rate of general prices for the year is forecast to be stable at 3.2%.
(2) Among the Asian NIEs in 2008, Singapore’s exports will pick up. The other three economies will see slowing expansions of external demand, caused by the slowing growth of the advanced economies and the Chinese economy, and will be underpinned by domestic demand. The combined growth rate of the Asian NIEs as a whole in 2008 is forecast to be 5.0%, a rate 0.4 percentage point lower than in 2007.
(3) Among the ASEAN 5, the economies of Thailand and Malaysia are forecast to develop steady domestic demand. The Indonesian economy is forecast to enjoy thriving expansions of both domestic and external demand. The Philippine economy will see slowing growth of domestic and external demand. The Vietnamese economy is forecast to accelerate further in 2008. The combined growth rate of the ASEAN 5 as a whole in 2008 is forecast to be a stable 6.1%. Their combined inflation rate of general prices in 2008 is forecast to be 5.0%, unchanged from the 2007 rate.
(4) The East Asian economy as a whole in 2008 is forecast to continue posting a brisk growth rate of 8.2%, though at a slower rate than the 8.7% registered in 2007. The combined inflation rate of the East Asian economy as a whole in 2008 is forecast to remain stable at 3.2%.
(1) The sub-prime mortgage financial crisis is likely to head toward resolution in the latter half of 2008, and its effect on the real economy of the U.S. is expected to be limited. In 2008, the economies of the U.S., Japan and Europe will slow.
(2) Due to the uncertainty in the financial market, investment funds are flowing into the commodities markets. In the latter half of 2008, these funds are forecast to return to the financial market, and the price of crude oil for 2008 as a whole to hover at approximately 80 dollars per barrel.
(3) Asian currencies are appreciating following the movement away from the dollar. It is assumed that this trend will continue in 2008.
(4) There will be little room for a continued fall in the price of IT-related products, which decreased in 2007.
The East Asian Economies in 2007
(1) The Chinese economy is predicted to grow by 11.5%, accelerating from 2006, led by continued solid investment and exports. The inflation rate of general prices is predicted to be 3.4%.
(2) The Asian NIEs have shown a general tendency for slow-growing external demand to give way to domestic demand as the support for the economy. The combined growth rate of the four NIEs as a whole in 2007 is predicted to be 5.4%, a rate 0.1 percentage point lower than in 2006. The combined inflation rate of general prices is predicted to be 1.4%.
(3) Among the ASEAN 5, the Indonesian economy has been buoyed by a recovery of investment, and the economy of Thailand has been influenced by the stagnation of domestic private demand caused by the chaotic political situation. The economies of Malaysia and the Philippines have been underpinned by domestic demand, while the Vietnamese economy has been fueled by the expansion of the industrial and service sectors. The combined growth rate of the ASEAN 5 as a whole in 2007 is predicted to be 6.0%, a rate 0.4 percentage point higher than in 2006. The combined inflation rate of general prices for the ASEAN 5 is predicted to be 5.0%.
(4) Boosted by the accelerating growth in the Chinese economy and ASEAN 5, the East Asian economy as a whole in 2007 is predicted to accelerate to 8.7%. The combined inflation rate of general prices for the East Asian economy as a whole is predicted to be 3.1%.
Economic Forecasts for East Asia in 2008
(1) The Chinese economy, led by domestic demand, is forecast to grow by 10.6% in 2008, posting a double-digit rate for the sixth consecutive year. The inflation rate of general prices for the year is forecast to be stable at 3.2%.
(2) Among the Asian NIEs in 2008, Singapore’s exports will pick up. The other three economies will see slowing expansions of external demand, caused by the slowing growth of the advanced economies and the Chinese economy, and will be underpinned by domestic demand. The combined growth rate of the Asian NIEs as a whole in 2008 is forecast to be 5.0%, a rate 0.4 percentage point lower than in 2007.
(3) Among the ASEAN 5, the economies of Thailand and Malaysia are forecast to develop steady domestic demand. The Indonesian economy is forecast to enjoy thriving expansions of both domestic and external demand. The Philippine economy will see slowing growth of domestic and external demand. The Vietnamese economy is forecast to accelerate further in 2008. The combined growth rate of the ASEAN 5 as a whole in 2008 is forecast to be a stable 6.1%. Their combined inflation rate of general prices in 2008 is forecast to be 5.0%, unchanged from the 2007 rate.
(4) The East Asian economy as a whole in 2008 is forecast to continue posting a brisk growth rate of 8.2%, though at a slower rate than the 8.7% registered in 2007. The combined inflation rate of the East Asian economy as a whole in 2008 is forecast to remain stable at 3.2%.
