World Economic and Financial Surveys

Regional Economic Outlook

OCT 18

International Monetary Fund

©2018 International Monetary Fund

Cataloging-in-Publication Data

Names: International Monetary Fund.

Title: Regional economic outlook. Asia and Pacific : Asia at the forefront : growth challenges for the next decade and beyond.

Other titles: Asia and Pacific : Asia at the forefront : growth challenges for the next decade and beyond | Asia at the forefront : growth challenges for the next decade and beyond | World economic and financial surveys

Description: Washington, DC : International Monetary Fund, 2018. | Oct. 18. | Includes bibliographical references.

Identifiers: ISBN 9781484375419 (paper)

Subjects: LCSH: Economic forecasting—Asia. | Economic forecasting— Pacific Area. | Asia— Economic conditions. | Pacific Area—Economic conditions. | Economic development—Asia. | Economic development— Pacific Area.

Classification: LCC HC412 .R4456 2018

The Regional economic Outlook: Asia and Pacific is published annually in the spring to review developments in the Asia-Pacific region. Both projections and policy considerations are those of the IMF staff and do not necessarily represent the views of the IMF, its Executive Board, or IMF Management.

Please send orders to:

International Monetary Fund, Publication Services

P.O. Box 92780, Washington, DC 20090, U.S.A.

Tel.: (202) 623-7430 Fax: (202) 623-7201

publications@imf.org

www.imfbookstore.org

www.elibrary.imf.org

Contents

• Acknowledgments
• Definitions
• 1. Overview
• 2. Asia as the Cycle Matures
  • Global Context
  • Recent Developments in the Region
  • Asia′s Near-Term Outlook
  • Risks to the Forecast
  • Policies to Build Resilience
• 3. The Evolving Role of Trade in Asia: Opening a New Chapter
  • Key Findings
• 4. Productivity Growth in Asia: Boosting Firm Dynamism and Weeding out the Zombies
  • Key Findings
  • Policy Implications
• 5. The Digital Revolution in Asia: Disruptor or New Growth Engine (Or Both)?
  • The Digital Landscape in Asia
  • Asia’s Growth: From Perspiration to Digital Inspiration
  • Automation and the Future of Work
  • E-commerce as a Growth Driver
  • Digitalization of Finance
  • Digitalization to Strengthen Public Finance
  • Policies for the Digital Age
• 6. Keeping Asia at the Forefront
• References

Acknowledgments

This Regional Economic Outlook: Asia and Pacific was prepared by a team led by Koshy Mathai of the IMF’s Asia and Pacific Department, under the overall direction of Changyong Rhee and Kenneth Kang. It is based on a set of background papers (IMF 2018a, 2018b, 2018c, and 2018d, available online at http://www.imf.org) coordinated by Koshy Mathai and prepared by the following contributors: Angana Banerji, Geoffrey Bannister, Patrick Blagrave, Sally Chen, David Corvino, To-Nhu Dao, Jayendu De, Sergei Dodzin, Tarhan Feyzioglu, Manuk Ghazanchyan, Albe Gjonbalaj, Souvik Gupta, Sandile Hlatshwayo, Gee Hee Hong, Keiko Honjo (RES), Sarwat Jahan,Juan Manuel Jauregui, Bo Jiang, Tidiane Kinda, Anh Van Le, Lamin Leigh, Vipichbolreach Long, Pablo Lopez Murphy (lead, IMF 2018a), Elena Loukoianova, Rui Mano, Alexandros Mourmouras, Dirk Muir, Medha Madhu Nair, Ryota Nakatani, Masahiro Nozaki, Anne Oeking, Simon Paroutzoglou, Shanaka J. Peiris (lead, IMF 2018b), Tahsin Saadi Sedik (lead, IMF 2018d), Manrique Saenz (co-lead, IMF 2018c), Todd Schneider, Can Sever, Ananya Shukla, Cormac Sullivan, Katsiaryna Svirydzenka (co-lead, IMF 2018c), Jarkko Turunen, Jiae Yoo, Longmei Zhang, Qianqian Zhang, and country teams. Alessandra Balestieri, Francis Landicho, and Socorro Santayana provided production assistance. Linda Long of the IMF’s Communications Department edited the volume and coordinated its publication and release with editing help from David Einhorn. Heidi Grauel provided layout services. The report is based on data available as of September 18, 2018, and includes comments from other departments and some Executive Directors.

Definitions

In this Regional Economic Outlook: Asia and Pacific, the following groupings are employed:

• “ASEAN” refers to Brunei Darussalam, Cambodia, Indonesia, Lao P.D.R., Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, unless otherwise specified.
• “ASEAN-5” refers to Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
• “Advanced Asia” refers to Australia, Hong Kong SAR, Japan, Korea, New Zealand, Singapore, and Taiwan Province of China.
• “Emerging Asia” refers to China, India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.
• “Frontier and Developing Asia” refers to Bangladesh, Cambodia, Lao P.D.R., Mongolia, Myanmar, Nepal, and Sri Lanka.
• “Asia” refers to ASEAN, East Asia, Advanced Asia, South Asia, and other Asian economies.
• “EU” refers to the European Union.
• “G7” refers to Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
• “G20” refers to Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, and the United States.

The following abbreviations are used:

The following conventions are used:

• In tables, a blank cell indicates “not applicable,” ellipsis points (. . .) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
• In figures and tables, shaded areas show IMF projections.
• An en dash (–) between years or months (for example, 2007–08 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2007/08) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2009).
• An em dash (–) indicates the figure is zero or less than half the final digit shown.
• “Billion” means a thousand million; “trillion” means a thousand billion.
• “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).

As used in this report, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.