Abstract

One year after the deepest recession in recent history, Asia is leading the global recovery. The Regional Economic Outlook: Asia and Pacific discusses the near-term outlook for the region, as well as the medium-term policy challenges that countries face. As in many emerging and developing markets, Asia rebounded swiftly during 2009 and in the first quarter of 2010, and in the near term the region is expected to continue leading the global recovery. In the medium term, the global crisis has highlighted the importance for Asia of ensuring that private domestic demand becomes a more prominent engine of growth.

References

  • Abiad, A., E. Detragiache, and T. Tressel, 2008, “A New Database of Financial Reforms,” IMF Working Paper No. 08/266 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Akitoby, B., R. Hemming, and G. Schwartz, 2007, “Public Investment and Public-Private Partnerships,” Economic Issues, Vol. 40 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Asian Development Bank, 2009, “Infrastructure for a Seamless Asia” (Manila).

  • Australian Government, the Treasury, 2010, “Australia to 2050: Future Challenges, the 2010 Intergenerational Report.” Available via Internet: http://ag.gov.au/cc

    • Search Google Scholar
    • Export Citation
  • Beck, T., and A. Demirguc-Kunt, 2006, “Small and Medium Enterprises: Access to Finance as a Growth Constraint,” Journal of Banking and Finance, Vol. 30, pp. 293143.

    • Search Google Scholar
    • Export Citation
  • Botman, D., A. Klemm, and R. Baqir, 2008, “Investment Incentives and Effective Tax Rates in the Philippines: A Comparison with Neighboring Countries,” IMF Working Paper No. 08/207 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Caceres, C., V. Guzzo, and M. Segoviano, 2010, “Global Risk Aversion, Contagion or Fundamentals?IMF Working Paper No. 10/120 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Calderon, C., and L. Serven, 2004a, “The Effects of Infrastructure Development on Growth and Income Distribution,” Policy Research Working Paper 3400 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Calderon, C., and L. Serven, 2004b, “Trends in Infrastructure in Latin America, 1980-2001,” Policy Research Working Paper 3401 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Davis, J., R. Ossowski, J. Daniel, and S. Barnett, 2001, Stabilization and Savings Funds for Nonrenewable Resources, IMF Occasional Paper No. 205 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • DeLong, J.B., 2002, “Productivity Growth in the 2000s,” in NBER Macroeconomics Annual, Vol. 17, ed. By M. Gertler and K. Rogoff (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Espinoza, R., and M. Segoviano, forthcoming,Probabilities of Default and the Market Price of Risk in a Distressed Economy,” IMF Working Paper (Washington: International Monetary Fund)

    • Search Google Scholar
    • Export Citation
  • Guimaraes, R., and O. Unteroberdoerster, 2006, “What’s Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence,” IMF Working Paper No. 06/190 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Heaney, R., C. Koga, B. Oliver, and A. Tran, 1999, “The Size Effect and Derivative Usage in Japan,” Working Paper (The Australian National University).

    • Search Google Scholar
    • Export Citation
  • Himmelberg, C., C. Mayer, and T. Sinai, 2005, “Assessing High House Prices: Fundamentals and Misperceptions,” Journal of Economic Perspectives, Vol. 19, No. 4, pp. 6792 (September).

    • Search Google Scholar
    • Export Citation
  • Hori, M., 2008, Investment Recovery from FinancialCrises, in IMF Country Report No. 08/194 (Washington: International Monetary Fund).

  • Hossain, A., 2009, Central Banking and Monetary Policy in the Asia-Pacific (London: Edward Elgar).

  • Hsieh, C.T., and P. Klenow, 2007, “Relative Prices and Relative Prosperity,” American Economic Review, Vol. 97, No. 3, pp. 56285.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2006a, “Asia’s Investment Slump,” Regional Economic Outlook: Asia and Pacific (Washington, May).

  • International Monetary Fund, 2006b, “Savings and Investment: An Emerging Asian and Singaporean Perspective,” IMF Country Report No. 06/151 (Washington, May).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2007, “Investment Recovery from Financial Crises: A View from Cross-Country Experiences,” IMF Country Report No. 07/231 (Washington, June).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2008a, “What Determines Investment in Korea?IMF Country Report No. 08/296 (Washington, September).

  • International Monetary Fund, 2008b, Regional Economic Outlook: Asia and Pacific (Washington, November).

  • International Monetary Fund, 2009a, Regional Economic Outlook: Asia and Pacific (Washington, October).

  • International Monetary Fund, 2009b, “Fiscal Rules–Anchoring Expectations for Sustainable Public Finances” (Washington, December).

  • International Monetary Fund, 2010a, Raising Medium-Term Growth: What Role Can Investment Play? IMF Country Report No. 10/212 (Washington, July).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2010b, Regional Economic Outlook: Asia and Pacific (Washington, April).

  • International Monetary Fund, 2010c, Japan—Article IV Staff Report, IMF Country Report No. 10/211 (Washington, July).

  • International Monetary Fund, 2010d, World Economic Outlook (Washington, April).

  • International Monetary Fund, 2010e, Global Financial Stability Report (Washington, October).

  • International Monetary Fund, 2010f, World Economic Outlook (Washington, October).

  • Jensen, R., 2007, “The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector,” Quarterly Journal of Economics, Vol. 122, No. 3, pp. 879924.

    • Search Google Scholar
    • Export Citation
  • Jongwanich, J., and D. Park, 2009, “Inflation in Developing Asia,” Journal of Asia Economics, Vol. 20, pp. 50718.

  • Kalra, S., 2008, “Global Volatility and Forex Returns in East Asia,” IMF Working Paper No. 08/208 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kang, K., and S.Y. Kim, 2006, “A Strategy for Restructuring the SME Sector in Korea,” Korea—Selected Issues, IMF Country Report No. 06/381 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Krugman, P., 1991, “Increasing Returns and Economic Geography,” Journal of Political Economy, Vol. 99, No. 3, pp. 48399.

  • Linden, G., K. Kraemer, and J. Dedrick, 2009, “Who Captures Value in a Global Innovation Network? The Case of Apple’s iPod,” Communications of the Association for Computing Machinery, Vol. 52, No. 3, pp. 14044.

    • Search Google Scholar
    • Export Citation
  • McKinsey Global Institute, 2000, “Why the Japanese Economy is Not Growing: Micro Barrriers to Productivity Growth” (July). Available via Internet: www.mgi.mckinsey.com/mgi/japanese.asp

    • Search Google Scholar
    • Export Citation
  • McKinsey and Company, 2010, “The Next Normal: Banking After the Crisis,” White Paper, February. Available via Internet: www.mckinsey.com/clientservice/Financial_Services/Knowledge_Highlights/Recent_Re ports.aspx

    • Search Google Scholar
    • Export Citation
  • Mercereau, B., 2005, “FDI Flows to Asia: Did the Dragon Crowd Out the Tigers?IMF Working Paper No. 05/189 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Norregaard, J., and T. S. Khan, 2007, “Tax Policy: Recent Trend,” IMF Working Paper No. 07/274 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Organisation for Economic Co-operation and Development, 2005, “Measuring and Assessing Underlying Inflation,” OECD Economic Outlook, Vol. 2005, pp. 12541.

    • Search Google Scholar
    • Export Citation
  • Organisation for Economic Co-operation and Development, 2008, “Science, Technology and Industry Outlook,” (Paris: OECD Publishing)

  • Pesaran, M. H., 2006, “Estimation and Inference in Large Heterogeneous Panels With a Multifactor Error Structure,” Econometrica, Vol. 74, pp. 9671012.

    • Search Google Scholar
    • Export Citation
  • Pesaran, M. H., T. Schuermann, and S. M. Weiner, 2004, “Modeling Regional Interdependencies Using a Global Error-Correcting Macroeconomic Model,” Journal of Business and Economic Statistics, Vol. 22, pp. 12962.

    • Search Google Scholar
    • Export Citation
  • Poterba, J., 1984, “Tax Subsidies to Owner-Occupied Housing: An Asset Market Approach,” Quarterly Journal of Economics, Vol. 99, No. 4, pp. 72952.

    • Search Google Scholar
    • Export Citation
  • Pritchett, L., 1996, “Mind Your P’s and Q’s: The Cost of Public Investment Is Not the Value of Public Capital,” Policy Research Working Paper 1660 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Rangarajan, C., 2010, “Economic Outlook for 2010/11,” Prime Minister’s Economic Advisory Council, New Delhi. Available via Internet: www. eac.gov.in/

    • Search Google Scholar
    • Export Citation
  • Segoviano, M. and C. Goodhart, 2009, “Banking Stability Measures,” IMF Working Paper, No. 09/4 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Straub, S., 2008, “Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges,” Policy Research Working Paper 4460 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Straub, S., C. Vellutini, and M. Walters, 2008, “Infrastructure and Economic Growth in East Asia,” Policy Research Working Paper 4589 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Swaroop, V., 1994, “The Public Financing of Infrastructure: Options and Issues,” Policy Research Working Paper 1288 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Tang, H.C., 2008, “Commodity Prices and Monetary Policy in Emerging Asia,” ADB Working Paper Series on Regional Economic Integration, No. 23 (Manila: Asian Development Bank).

    • Search Google Scholar
    • Export Citation
  • Uesugi, I., K. Sakai, and G. Yamashiro, 2006, “Effectiveness of Credit Guarantees in the Japanese Loan Market,” RIETI Discussion Paper, No. 06-E-004.

    • Search Google Scholar
    • Export Citation
  • Venables, A., 2006, “Shifts in Economic Geography and Their Causes,” paper presented at the Federal Reserve Bank of Kansas City Symposium, The New Economic Geography: Effects and Policy Implications, August. Available via Internet: http://www.KansasCityFed.org.

    • Search Google Scholar
    • Export Citation
  • World Bank, 1994, “Infrastructure for Development,” World Development Report 1994 (Washington).

  • World Economic Forum, 2009, The Global Competitiveness Repor 2009—2010 (Geneva, Switzerland).

  • Young, A., 1995, “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience,” The Quarterly Journal of Economics, Vol. 110, No. 3, pp. 64180.

    • Search Google Scholar
    • Export Citation
  • Zee, H. H., J. G. Stotsky, and E. Ley, 2002, “Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries,” World Development, Vol. 30, No. 9, pp.1497516.

    • Search Google Scholar
    • Export Citation
Consolidating the Recovery and Building Sustainable Growth
  • Abiad, A., E. Detragiache, and T. Tressel, 2008, “A New Database of Financial Reforms,” IMF Working Paper No. 08/266 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Akitoby, B., R. Hemming, and G. Schwartz, 2007, “Public Investment and Public-Private Partnerships,” Economic Issues, Vol. 40 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Asian Development Bank, 2009, “Infrastructure for a Seamless Asia” (Manila).

  • Australian Government, the Treasury, 2010, “Australia to 2050: Future Challenges, the 2010 Intergenerational Report.” Available via Internet: http://ag.gov.au/cc

    • Search Google Scholar
    • Export Citation
  • Beck, T., and A. Demirguc-Kunt, 2006, “Small and Medium Enterprises: Access to Finance as a Growth Constraint,” Journal of Banking and Finance, Vol. 30, pp. 293143.

    • Search Google Scholar
    • Export Citation
  • Botman, D., A. Klemm, and R. Baqir, 2008, “Investment Incentives and Effective Tax Rates in the Philippines: A Comparison with Neighboring Countries,” IMF Working Paper No. 08/207 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Caceres, C., V. Guzzo, and M. Segoviano, 2010, “Global Risk Aversion, Contagion or Fundamentals?IMF Working Paper No. 10/120 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Calderon, C., and L. Serven, 2004a, “The Effects of Infrastructure Development on Growth and Income Distribution,” Policy Research Working Paper 3400 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Calderon, C., and L. Serven, 2004b, “Trends in Infrastructure in Latin America, 1980-2001,” Policy Research Working Paper 3401 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Davis, J., R. Ossowski, J. Daniel, and S. Barnett, 2001, Stabilization and Savings Funds for Nonrenewable Resources, IMF Occasional Paper No. 205 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • DeLong, J.B., 2002, “Productivity Growth in the 2000s,” in NBER Macroeconomics Annual, Vol. 17, ed. By M. Gertler and K. Rogoff (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Espinoza, R., and M. Segoviano, forthcoming,Probabilities of Default and the Market Price of Risk in a Distressed Economy,” IMF Working Paper (Washington: International Monetary Fund)

    • Search Google Scholar
    • Export Citation
  • Guimaraes, R., and O. Unteroberdoerster, 2006, “What’s Driving Private Investment in Malaysia? Aggregate Trends and Firm-Level Evidence,” IMF Working Paper No. 06/190 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Heaney, R., C. Koga, B. Oliver, and A. Tran, 1999, “The Size Effect and Derivative Usage in Japan,” Working Paper (The Australian National University).

    • Search Google Scholar
    • Export Citation
  • Himmelberg, C., C. Mayer, and T. Sinai, 2005, “Assessing High House Prices: Fundamentals and Misperceptions,” Journal of Economic Perspectives, Vol. 19, No. 4, pp. 6792 (September).

    • Search Google Scholar
    • Export Citation
  • Hori, M., 2008, Investment Recovery from FinancialCrises, in IMF Country Report No. 08/194 (Washington: International Monetary Fund).

  • Hossain, A., 2009, Central Banking and Monetary Policy in the Asia-Pacific (London: Edward Elgar).

  • Hsieh, C.T., and P. Klenow, 2007, “Relative Prices and Relative Prosperity,” American Economic Review, Vol. 97, No. 3, pp. 56285.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2006a, “Asia’s Investment Slump,” Regional Economic Outlook: Asia and Pacific (Washington, May).

  • International Monetary Fund, 2006b, “Savings and Investment: An Emerging Asian and Singaporean Perspective,” IMF Country Report No. 06/151 (Washington, May).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2007, “Investment Recovery from Financial Crises: A View from Cross-Country Experiences,” IMF Country Report No. 07/231 (Washington, June).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2008a, “What Determines Investment in Korea?IMF Country Report No. 08/296 (Washington, September).

  • International Monetary Fund, 2008b, Regional Economic Outlook: Asia and Pacific (Washington, November).

  • International Monetary Fund, 2009a, Regional Economic Outlook: Asia and Pacific (Washington, October).

  • International Monetary Fund, 2009b, “Fiscal Rules–Anchoring Expectations for Sustainable Public Finances” (Washington, December).

  • International Monetary Fund, 2010a, Raising Medium-Term Growth: What Role Can Investment Play? IMF Country Report No. 10/212 (Washington, July).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2010b, Regional Economic Outlook: Asia and Pacific (Washington, April).

  • International Monetary Fund, 2010c, Japan—Article IV Staff Report, IMF Country Report No. 10/211 (Washington, July).

  • International Monetary Fund, 2010d, World Economic Outlook (Washington, April).

  • International Monetary Fund, 2010e, Global Financial Stability Report (Washington, October).

  • International Monetary Fund, 2010f, World Economic Outlook (Washington, October).

  • Jensen, R., 2007, “The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector,” Quarterly Journal of Economics, Vol. 122, No. 3, pp. 879924.

    • Search Google Scholar
    • Export Citation
  • Jongwanich, J., and D. Park, 2009, “Inflation in Developing Asia,” Journal of Asia Economics, Vol. 20, pp. 50718.

  • Kalra, S., 2008, “Global Volatility and Forex Returns in East Asia,” IMF Working Paper No. 08/208 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kang, K., and S.Y. Kim, 2006, “A Strategy for Restructuring the SME Sector in Korea,” Korea—Selected Issues, IMF Country Report No. 06/381 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Krugman, P., 1991, “Increasing Returns and Economic Geography,” Journal of Political Economy, Vol. 99, No. 3, pp. 48399.

  • Linden, G., K. Kraemer, and J. Dedrick, 2009, “Who Captures Value in a Global Innovation Network? The Case of Apple’s iPod,” Communications of the Association for Computing Machinery, Vol. 52, No. 3, pp. 14044.

    • Search Google Scholar
    • Export Citation
  • McKinsey Global Institute, 2000, “Why the Japanese Economy is Not Growing: Micro Barrriers to Productivity Growth” (July). Available via Internet: www.mgi.mckinsey.com/mgi/japanese.asp

    • Search Google Scholar
    • Export Citation
  • McKinsey and Company, 2010, “The Next Normal: Banking After the Crisis,” White Paper, February. Available via Internet: www.mckinsey.com/clientservice/Financial_Services/Knowledge_Highlights/Recent_Re ports.aspx

    • Search Google Scholar
    • Export Citation
  • Mercereau, B., 2005, “FDI Flows to Asia: Did the Dragon Crowd Out the Tigers?IMF Working Paper No. 05/189 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Norregaard, J., and T. S. Khan, 2007, “Tax Policy: Recent Trend,” IMF Working Paper No. 07/274 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Organisation for Economic Co-operation and Development, 2005, “Measuring and Assessing Underlying Inflation,” OECD Economic Outlook, Vol. 2005, pp. 12541.

    • Search Google Scholar
    • Export Citation
  • Organisation for Economic Co-operation and Development, 2008, “Science, Technology and Industry Outlook,” (Paris: OECD Publishing)

  • Pesaran, M. H., 2006, “Estimation and Inference in Large Heterogeneous Panels With a Multifactor Error Structure,” Econometrica, Vol. 74, pp. 9671012.

    • Search Google Scholar
    • Export Citation
  • Pesaran, M. H., T. Schuermann, and S. M. Weiner, 2004, “Modeling Regional Interdependencies Using a Global Error-Correcting Macroeconomic Model,” Journal of Business and Economic Statistics, Vol. 22, pp. 12962.

    • Search Google Scholar
    • Export Citation
  • Poterba, J., 1984, “Tax Subsidies to Owner-Occupied Housing: An Asset Market Approach,” Quarterly Journal of Economics, Vol. 99, No. 4, pp. 72952.

    • Search Google Scholar
    • Export Citation
  • Pritchett, L., 1996, “Mind Your P’s and Q’s: The Cost of Public Investment Is Not the Value of Public Capital,” Policy Research Working Paper 1660 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Rangarajan, C., 2010, “Economic Outlook for 2010/11,” Prime Minister’s Economic Advisory Council, New Delhi. Available via Internet: www. eac.gov.in/

    • Search Google Scholar
    • Export Citation
  • Segoviano, M. and C. Goodhart, 2009, “Banking Stability Measures,” IMF Working Paper, No. 09/4 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Straub, S., 2008, “Infrastructure and Growth in Developing Countries: Recent Advances and Research Challenges,” Policy Research Working Paper 4460 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Straub, S., C. Vellutini, and M. Walters, 2008, “Infrastructure and Economic Growth in East Asia,” Policy Research Working Paper 4589 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Swaroop, V., 1994, “The Public Financing of Infrastructure: Options and Issues,” Policy Research Working Paper 1288 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Tang, H.C., 2008, “Commodity Prices and Monetary Policy in Emerging Asia,” ADB Working Paper Series on Regional Economic Integration, No. 23 (Manila: Asian Development Bank).

    • Search Google Scholar
    • Export Citation
  • Uesugi, I., K. Sakai, and G. Yamashiro, 2006, “Effectiveness of Credit Guarantees in the Japanese Loan Market,” RIETI Discussion Paper, No. 06-E-004.

    • Search Google Scholar
    • Export Citation
  • Venables, A., 2006, “Shifts in Economic Geography and Their Causes,” paper presented at the Federal Reserve Bank of Kansas City Symposium, The New Economic Geography: Effects and Policy Implications, August. Available via Internet: http://www.KansasCityFed.org.

    • Search Google Scholar
    • Export Citation
  • World Bank, 1994, “Infrastructure for Development,” World Development Report 1994 (Washington).

  • World Economic Forum, 2009, The Global Competitiveness Repor 2009—2010 (Geneva, Switzerland).

  • Young, A., 1995, “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience,” The Quarterly Journal of Economics, Vol. 110, No. 3, pp. 64180.

    • Search Google Scholar
    • Export Citation
  • Zee, H. H., J. G. Stotsky, and E. Ley, 2002, “Tax Incentives for Business Investment: A Primer for Policy Makers in Developing Countries,” World Development, Vol. 30, No. 9, pp.1497516.

    • Search Google Scholar
    • Export Citation