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Rahul Anand, Mr. Kevin C Cheng, Sidra Rehman, and Ms. Longmei Zhang
Using three distinct approaches—statistical filtering, production function, and multivariate model— this paper estimates potential growth for China, India, and five ASEAN countries (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) during 1993–2013. The main findings include: (i) both China and India have recently exhibited a slowdown in potential growth, largely reflecting a decline of total factor productivity (TFP) growth; (ii) by contrast, trend growth for the five ASEAN countries has been rather stable and might even have increased marginally, with the notable exception of Vietnam;(iii) over the longer term, demographic factors will be much more supportive in India and some ASEAN economies than in China, where working-age population should start shrinking, with the overall dependency ratio climbing by the end of this decade. Improving or sustaining potential growth calls for broad structural reforms.
International Monetary Fund. Secretary's Department

, to almost 8 per cent in the United States and ranged upward to 13 per cent in Italy. In most of the industrial countries, the current rate of price increase is still much too high to be considered acceptable. The persistence of inflation generates fears and uncertainties that confuse economic decisions and hamper all aspects of policymaking. Outside the industrial world, the inflation picture is also, on the whole, unsatisfactory. With some welcome exceptions, as in a number of Asian countries, the rates of price increase incurred by the nonindustrial countries

International Monetary Fund

exchange rate has remained roughly unchanged against the U.S. dollar since December. Broad money growth picked up to 10.6 percent in December from 7.5 percent in November. Inflation rose in January. The authorities view the inflation picture as manageable but signaled a readiness to act in response to inflation risks . CPI inflation rose to 3.5 percent (year/year) and 0.8 percent (month/month) in January from 3 percent and 0.5 percent, respectively, in December. The increase was driven mainly by food and energy prices. Food prices were affected by domestic weather

International Monetary Fund

the debt dynamics are worsening. Directors encouraged the authorities to refrain from adopting a supplementary budget until the inflation picture improves. Directors welcomed the significant progress achieved in the areas of tax administration, civil service reform, and public financial management. Nevertheless, the authorities need to address urgently remaining weaknesses in tax compliance and the financial monitoring of state enterprises. Directors underscored the importance of controlling inflation. The macroeconomic policy framework should be buttressed not

Rahul Anand, Kevin C. Cheng, Sidra Rehman, Ms. Longmei Zhang, and Mr. Romain A Duval

findings. The rest of the paper will be organized as follows: Section II presents stylized facts about growth and inflation in emerging Asia; Section III lays outs various techniques and results; Section IV interprets the findings; while Section V concludes with some policy implications. II. Stylized Facts about Trend Growth and Inflation Since the GFC, headline growth has slowed substantially in both China and India, although the inflation picture differs. Growth in China has slowed from 12 percent in 2010:Q1 to around 8 percent, while growth in India

International Monetary Fund. Western Hemisphere Dept.

, an increase in labor productivity, and falling energy prices. There is also downward bias in at least one component of the consumer price index, but this bias does not seem to materially change the inflation picture. Inflation expectations remain anchored at the official target of 3 percent. The central bank has left the policy rate at 5 percent, a broadly neutral rate, since January 2012. The government recorded a small fiscal surplus in 2012 as it saved revenue overperformance and underspent the budget. The structural deficit improved to ½ percent of GDP

Mr. Pablo Emilio Guidotti and Manmohan S. Kumar

to further domestic debt accumulation. • Second, the worsening fiscal and domestic debt pictures were accompanied by a sharp increase in the rate of inflation, with some countries experiencing annual rates averaging over 200 percent and many sustaining increasingly negative and volatile real interest rates. This volatility exacerbated the uncertainty surrounding the inflation picture, further harming saving, investment, and growth. Fiscal policy and public debt In light of all these interconnections, developments related to external and domestic debt

Carlos E. Sansón

Carlos E. Sansón Despite the first oil price shock, countries in the Latin American and Caribbean region experienced strong economic expansion and made significant strides in adjusting their balances of payments (BOP) between 1973 and 1980. However, the inflation picture has recently worsened markedly. In adjusting to the 1979-80 round of oil price increases, therefore, the region faces a number of difficult problems. This article will present an overview of current developments and a medium-term outlook for countries of Latin America and the

Trevor A. Manuel

and 4.2 percent next year—more than twice the average in 1984–93 and marginally higher than the average for all developing countries. Macro-economic stability is being consolidated, with average consumer price inflation at 9.7 percent in 2002, down from 13.2 percent in 2001 and 54.6 percent in 1994. Underpinning the better inflation picture are lower fiscal deficits, which have declined from an average 5.2 percent of GDP in 1994 to 2.1 percent in 2001. Of course, to reduce poverty, more consistent and rapid economic growth is required. One of the most important


small relative to the total debt outstanding, the agreements undoubtedly helped countries to persevere with economic reforms and increased domestic and external confidence. How it worked Macroeconomic stabilization and structural reforms have resulted in major improvements in economic performance. In many countries, the inflation picture has improved, most notably in Argentina, Bolivia, Nicaragua, and Peru, and most recently in Brazil. Capital reflows have helped strengthen external payments positions and remonetize financial systems; and, most important