Population. G.1. Economic growth. There was an initial dramatic recovery from the crisis in 2010 due to fiscal stimulus and intraregional trade.

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1 Statistical Yearbook for Asia and the Pacific 2013 G. Economy G.1. After the onset of the global financial crisis of 2008/09, a rapid recovery was seen in the Asian and Pacific region in 2010, but this recovery decelerated in 2011 because the global economy had entered a second phase of the crisis, as major developed economies of the globe pulled back on spending due to public debt concerns coming to the fore coupled with poor growth records. The region s growth was thus curtailed as it had to contend with constrained demand for its exports from major markets in developed economies. Growth in Asia and the Pacific was further impacted by the return of high food and energy prices, as well as the effects of a host of natural disasters. There was an initial dramatic recovery from the crisis in 2010 due to fiscal stimulus and intraregional trade. been particularly high due to a recovery from the low growth in 2009 that was a result of the initial impact of the global financial crisis. Apart from the base effect, the 2011 growth slowdown also reflected the withdrawal of fiscal stimulus policies, tighter monetary policies adopted in some countries to meet the challenge of rising inflation, and in general the sluggish recovery in the developed economies of the world. The slower growth in exports, which slowed economic growth in developing economies, began to be seen during the course of 2010 and this trend continued during Figure G.1-1 Annual real GDP growth rates, Asia and the Pacific, United States of America and European Union, In 2010, the region initially experienced a strong recovery from the global financial crisis of 2008/09. Economies that are more oriented towards domestic demand survived the initial part of the crisis in 2009 with only relatively small reductions in growth. More export-oriented economies, however, bore the brunt of the growth contraction in the region. This dichotomy between countries meant that the region as a whole experienced lower but still positive growth in The year 2010 saw export-oriented economies recover strongly, while domestic-demand oriented economies continued to perform robustly, contributing to the overall recovery of growth in the region. Some of the recovery of export-oriented economies was due to strong support from intraregional trade with China, buttressed by renewed growth in exports to major markets in the developed world. Investment was also a strong driver of growth in 2010, with significant fiscal stimulus policies implemented in a number of economies in the region, as well as investment in the mining sector particularly in North and Central Asia. The growth rate in developing economies in the Asian and Pacific region in 2011 was substantially lower than that in 2010, showing a decrease from 8.4 to 6.8 per cent. The 2010 growth rate had Note: The 27 member countries of the European Union: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom of Great Britain and Northern Ireland. The slowdown in growth in 2011 particularly affected the subregions where exports play a major role. The impact of the sluggish recovery in developed economies was felt in those subregions where exports are a key driver of growth. Hence, South- East Asia experienced the greatest slowdown in the growth rate, with a fall from 8.0 per cent in 2010 to 4.5 per cent in The economic growth rate of developing economies in East and North-East Asia also slowed, from 9.4 per cent in 2010 to 8.0 per cent in The subregions where domestic demand is important also displayed a reduced growth performance in 2011, Economy 215

2 Economy G. Economy Statistical Yearbook for Asia and the Pacific 2013 as tighter monetary policies in some countries constrained spending. Thus, the South and South-West Asian subregion saw growth decelerate from an annual rate of 8.5 per cent in 2010 to 6.5 per cent in The subregions where commodities play a significant role displayed robust growth in Hence, North and Central Asia had a fairly stable growth rate, at 4.8 per cent in Pacific island developing economies also saw relatively strong growth, at 6.3 per cent in 2011 after having grown by 4.6 per cent in Figure G.1-2 GDP growth rates, Asian and Pacific subregions, average 2008/09, 2010 and 2011 was the slowdown in investment growth in many developing economies. Investment growth declined in 2011 compared with that in the previous year for all developing economies except those in East and North-East Asia. While some of this decline was due to the base effect of particularly high investment growth in 2010, factors such as the easing of fiscal stimulus in the region and tighter monetary policies also had a role to play. Apart from the Pacific island developing economies that witnessed a decline in investment growth in 2011, the greatest proportional decline in investment growth between 2010 and 2011 was seen in South-East Asia. Figure G.1-3 Gross domestic investment growth rates, Asia and the Pacific, Growth in major developing economies where domestic demand is particularly important declined less in 2011 compared with growth in a number of more open economies. Some of these major economies nevertheless experienced a slowdown in 2011 stemming in significant part from the effects of tighter monetary policies. China and India grew by 9.2 per cent and 6.9 per cent, respectively, in 2011, compared with 10.3 per cent and 9.6 per cent in The global environment also affected sales from the large export sector of China and financing from abroad for Indian enterprises. Indonesia maintained its strong growth performance, with the economy expanding by 6.5 per cent in 2011 compared with 6.2 per cent in the previous year. Growth in investment and industrial production slowed in One of the drivers of the slowdown in growth in developing economies of the region in 2011 Data on the components of production also reflect the slowdown of economic growth in the region in The growth rate of the contribution of industry to value-added declined in 2011 compared with that in 2010 in all developing economies in the region, apart from those in South-East Asia. This partly reflected the slowdown in demand from developed world economies for industrial exports from the region, as well as domestic pressure on industrial production in some countries resulting from reduced fiscal stimulus and tighter monetary policies. However, economic growth was 216

3 Statistical Yearbook for Asia and the Pacific 2013 G. Economy supported somewhat in nearly all subregions by increasing growth in the contribution to valueadded of the agricultural and services sectors of the economies in the region. Figure G.1-4 Value added by sector growth, Asia and the Pacific, 2011 Despite the slowdown, Asia and the Pacific remained the most dynamic region globally. Despite the deceleration in growth in 2011, Asia and the Pacific remained by far the most dynamic region in the world in terms of economic growth. As in 2010, the region was the engine of global growth, growing nearly 20 per cent faster than the next-fastest-growing developing region of the world, that is, Latin America and the Caribbean. This brought into focus the role of Asia and the Pacific as the engine for global recovery. The region serves as a source of demand for the goods and, even more so, the commodities of other regions, which has led to growth worldwide. Figure G.1-5 GDP growth rates, Asia and the Pacific and selected world regions, 2010 and 2011 Box G.1-1 Multiple shocks make growth volatile and can lead to permanent economic loss Economy Developing economies, the smaller ones in particular, are vulnerable to natural and other disasters due to structural weaknesses, among other causes. They do not often have diverse exports and they can be highly dependent on primary commodities. Developing economies can also be quite remote and have high levels of poverty. As a result, they have less capacity to absorb shocks and their economic growth is likely to be more volatile. This is evident in Samoa, which was hit by Cyclone Val in 1991 and by a tsunami in 2009, both of which caused significant losses in output (see figure below). Samoa, real GDP growth, Severe shocks can also knock countries off their growth trajectories and lead to a permanent loss in output. In low-income economies, droughts, floods, storms and extreme temperature events can lead to declines in real per capita GDP of about 2 per cent. a A major disaster causes suffering and loss of life, but in a poor country it also damages the limited stock of capital goods and can lead to a long-term decline in productive capacity. As economic activity declines, fiscal revenues also shrink. The sudden and large demand for cash and foreign currency adds to the macroeconomic challenges. All this distress can easily set back the economy and, as a result, economic growth declines. If a country suffers a series of shocks there can be a cumulative effect, as illustrated by Cyclone Ami in Fiji in 2003 and the Indian Ocean tsunami in Maldives in 2004, both of which were coupled with the 2008 global financial crisis (see figure below). In addition to resulting in permanent losses in output, large shocks also affect the achievement of the Millennium Development Goals. In Pakistan, for example, the 2005 earthquake, the 2007 cyclone and the 2010 floods affected net primary school enrolment. These events damaged education facilities, reducing the quantity and quality of education. 217

4 Economy G. Economy Statistical Yearbook for Asia and the Pacific 2013 Persistent losses caused by shocks, Fiji and Maldives 3.50 Fiji 1.30 Maldives GDP (constant 2005 $ Billion) : tropical cyclone Actual GDP Pre-crisis trend 1997: Asian crisis 2008: global financial crisis GDP (constant 2005 $ Billion) Actual GDP Pre-crisis trend 2004: Indian Ocean tsunami 2008: global financial crisis 1997: Asian crisis Source: ESCAP, based on data from United Nations Statistics Division. Note: For more details, see Luc Laeven and Fabian Valencia, Systemic banking crises: a new database, IMF Working Paper, No. WP/08/224 (International Monetary Fund, 2008). a Claudio Raddatz, Are external shocks responsible for the instability of output in low-income countries?, Journal of Development Economics, vol. 84, No. 1 (September 2007), pp ; and Stefan Hochrainer, Assessing the macroeconomic impacts of natural disasters, World Bank Policy Research Working Paper, No (Washington, DC, World Bank, 2009). Further reading Economic Commission for Latin America and the Caribbean. Latin America and the Caribbean in the World Economy : A Crisis Generated in the Centre and a Recovery Driven by the Emerging Economies. United Nations, Available from crisis_generated_in_the_centre_and_a_recovery_driven_by_the_emerging_economies.pdf. ESCAP. Economic and Social Survey of Asia and the Pacific 2011: Sustaining Dynamism and Inclusive Development Connectivity in the Region and Productive Capacity in Least Developed Countries. Sales No. E.11.II.F.2. Available from Economic and Social Survey of Asia and the Pacific 2012: Pursuing Shared Prosperity in an Era of Turbulence and High Commodity Prices. Sales No. E.12.II.F.9. Available from publications/survey2012/download/survey_2012.pdf. Rising food prices and inflation in the Asia-Pacific region: causes, impact and policy response. MPDD Policy Brief, No. 7. March Available from me_brief/mpdd-pb-7.pdf. The European debt crisis: implications for Asia and the Pacific. MPDD Policy Brief, No. 4. August Available from United Nations. World Economic Situation and Prospects Sales No. E.11.II.C.2. Available from 218

5 Statistical Yearbook for Asia and the Pacific 2013 G. Economy Technical notes Gross domestic product (GDP) The total market value of all final goods and services produced within national borders in a given period of time. Purchasing power parity (PPP) PPP gives the number of units of a country s currency required to buy the same amount of goods and services in the domestic market as a United States dollar would buy in the United States. Costs in local currency units are converted to international dollars using PPP exchange rates. An international dollar has the same purchasing power as the United States dollar has in the United States. An international dollar is therefore a hypothetical currency that is used as a means of translating and comparing costs from one country to the other using a common reference point, the United States dollar. Indicators GDP in constant prices (billion 2005 United States dollars, percentage change per annum, 2005 United States dollars per capita, percentage change per capita per annum) GDP expressed in billions of constant 2005 United States dollars; also known as real GDP. Indicator calculations: Per capita figures are based on population figures (WPP2012). Aggregate calculations: Sum of individual country values (billion 2005 United States dollars); weighted averages using total population (WPP2012) as weight (2005 United States dollars per capita, percentage change per capita per annum); average annual growth of aggregate values (percentage change per annum, percentage change per capita per annum) over several years are calculated using the geometric growth model. Missing data are not imputed. GDP (2005 PPP dollars per capita) GDP per capita is calculated as the aggregate of production (GDP) divided by the population size based on WPP2012 and expressed in constant 2005 PPP dollars per capita. Aggregate calculations: Weighted averages using total population (WPP2012) as weight. Missing data are not imputed. GDP in current prices (billion United States dollars, United States dollars per capita) GDP expressed in the prices of the current reporting period; also known as nominal GDP. Indicator calculations: Per capita figures are based on population figures (WPP2012). Aggregate calculations: Sum of individual country values (billion United States dollars); weighted averages using total population (WPP2012) as weight (United States dollars per capita). Missing data are not imputed. Gross domestic investment rate in current prices (percentage of GDP, percentage change per annum) The sum of gross fixed capital formation and changes in stocks divided by the total GDP in national currencies. Indicator calculations: Percentages of GDP are based on national accounts data in national currencies (NAMAD). Aggregate calculations: Weighted averages using GDP in current United States dollars as weight (percentage of GDP); average annual growth of aggregate values (percentage change per annum). Missing data are not imputed. Gross national income in current prices (billion United States dollars, United States dollars per capita) GDP less net taxes on production and imports, less compensation of employees and property income payable to the rest of the world, plus the corresponding items receivable from the rest of the world (that is, GDP less primary incomes payable to non-resident units, plus primary incomes receivable from non-resident units). Indicator calculations: Per capita figures are based on population figures (WPP2012). Aggregate calculations: Sum of individual country values (billion United States dollars); weighted averages using population (WPP2012) as weight (United States dollars per capita). Missing data are not imputed. Value added by sector in constant prices: agriculture, industry and services (percentage of value added, percentage change per annum) Generation of gross value added by the International Standard Industrial Classification of economic activity. Agriculture includes Economy 219

6 Economy G. Economy Statistical Yearbook for Asia and the Pacific 2013 agriculture, hunting, forestry and fishing. Industry includes construction, mining, manufacturing and utilities. Services include transport, storage and communication, wholesale, retail, restaurants, hotels, and other types of enterprises. Indicator calculations: Percentages of total value-added figures are based on national accounts data in national currencies (NAMAD); percentage change per annum is based on value added components in the national currency. Aggregate calculations: Weighted averages using GDP in constant 2005 United States dollars as weight (percentage of GDP); average annual growth of aggregate values (percentage change per annum). Sources United Nations Statistics Division, NAMAD. Individual country data are collected from national statistical offices of countries through the United Nations Statistics Division National Accounts Questionnaire; data on countries and years that are missing from the questionnaire are estimated by the United Nations Statistics Division. PPP: World Development Indicators, World Bank. National accounts data are compiled by the World Bank, International Comparison Program database. The World Bank makes some adjustments to the data. Data obtained: 11 January 2013, except average annual GDP per capita (2005 United States dollars), growth rate (percentage change per capita per annum) and GDP (2005 PPP dollars per capita) obtained on 29 January 2013; gross national income in current prices obtained on 12 February 2013; and gross domestic investment rate in current prices obtained on 23 January

7 Statistical Yearbook for Asia and the Pacific 2013 G. Economy G.1.1 Real GDP Billion 2005 US dollars % change per annum Gross domestic product 2005 PPP dollars per capita 2005 US dollars per capita % change 2005 US dollars per capita per annum East and North-East Asia China DPR Korea Hong Kong, China Japan Macao, China Mongolia Republic of Korea South-East Asia Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Timor-Leste Viet Nam South and South-West Asia Afghanistan Bangladesh Bhutan India Iran (Islamic Rep. of) Maldives Nepal Pakistan Sri Lanka Turkey North and Central Asia Armenia Azerbaijan Georgia Kazakhstan Kyrgyzstan Russian Federation Tajikistan Turkmenistan Uzbekistan Pacific American Samoa Australia Cook Islands Fiji French Polynesia Guam Kiribati Marshall Islands Micronesia (F.S.) Nauru New Caledonia New Zealand Niue Northern Mariana Islands Palau Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu Asia and the Pacific Developed countries Developing countries LLDC LDC ASEAN ECO SAARC Central Asia Pacific island dev. econ Low income econ Lower middle income econ Upper middle income econ High income econ Africa Europe Latin America and Carib North America World

8 G. Economy Statistical Yearbook for Asia and the Pacific 2013 G.1.2 Nominal GDP, GNI and GDI 222 Gross domestic product in current prices Gross domestic investment rate Billion US dollars US dollars per capita % of GDP % change per annum Gross national income Billion US dollars US dollars per capita East and North-East Asia China DPR Korea Hong Kong, China Japan Macao, China Mongolia Republic of Korea South-East Asia Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Timor-Leste Viet Nam South and South-West Asia Afghanistan Bangladesh Bhutan India Iran (Islamic Rep. of) Maldives Nepal Pakistan Sri Lanka Turkey North and Central Asia Armenia Azerbaijan Georgia Kazakhstan Kyrgyzstan Russian Federation Tajikistan Turkmenistan Uzbekistan Pacific American Samoa Australia Cook Islands Fiji French Polynesia Guam Kiribati Marshall Islands Micronesia (F.S.) Nauru New Caledonia New Zealand Niue Northern Mariana Islands Palau Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu Asia and the Pacific Developed countries Developing countries LLDC LDC ASEAN ECO SAARC Central Asia Pacific island dev. econ Low income econ Lower middle income econ Upper middle income econ High income econ Africa Europe Latin America and Carib North America World

9 G.1.3 Economic sectors Value added by sector Statistical Yearbook for Asia and the Pacific 2013 G. Economy Average annual growth rate of value added Agriculture Industry Services Agriculture Industry Services % of value added % change per annum East and North-East Asia China DPR Korea Hong Kong, China Japan Macao, China Mongolia Republic of Korea South-East Asia Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Timor-Leste Viet Nam South and South-West Asia Afghanistan Bangladesh Bhutan India Iran (Islamic Rep. of) Maldives Nepal Pakistan Sri Lanka Turkey North and Central Asia Armenia Azerbaijan Georgia Kazakhstan Kyrgyzstan Russian Federation Tajikistan Turkmenistan Uzbekistan Pacific American Samoa Australia Cook Islands Fiji French Polynesia Guam Kiribati Marshall Islands Micronesia (F.S.) Nauru New Caledonia New Zealand Niue Northern Mariana Islands Palau Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu Asia and the Pacific Developed countries Developing countries LLDC LDC ASEAN ECO SAARC Central Asia Pacific island dev. econ Low income econ Lower middle income econ Upper middle income econ High income econ Africa Europe Latin America and Carib North America World