Is Southeast Asia Still Too Dependent on U.S. Growth? Claire Innes Asia-Pacific Group Global Insight

Transcription

1 Is Southeast Asia Still Too Dependent on U.S. Growth? Claire Innes Asia-Pacific Group Global Insight

2 Agenda Southeast Asia s growth model A shift to domestic demand-led Growth? The development of an intra-regional market? Future rebalancing: generating internal demand

3 Southeast Asia s Growth Model Inflows of FDI coincided with a period of aggressive liberalization in Southeast Asia Multinational Enterprises and the fragmentation of vertical supply chains Asia: low-cost, efficient production and assembly centre Goods exported to mature consumer markets

4 A Shift to Domestic Demand-Led Growth? Post-Asian , policies to stimulate domestic demand implemented The case of Thailand: Thaksinomics However, net exports driver of growth and recovery since Asian financial crisis

5 A Shift to Domestic Demand-Led Growth? 150 Thailand: Contribution of Demand Components to GDP Growth (% of total) Domestic Demand Government Consumption Net Exports Imports of Goods and Services Private Consumption Gross Domestic Fixed Capital Formation Exports of Goods and Services

6 A Shift to Domestic Demand-Led Growth? Collapse in investment; recovery but levels still below pre-crisis peaks Structural problems inhibit domestic demand growth Imbalance reflected in region s recurring external surpluses

7 Emergence of an Intra-regional market? AFTA Total Trade by Destination (% of World) U.S. Japan Asia Europe

8 Emergence of an Intra-regional market? Preferential trading agreements have existed in ASEAN since CEPT agreement implemented aimed at creating an ASEAN Free Trade Area The Noodle Bowl of bilateral trade agreements However, inter-afta trade growth is still modest Growth dynamism is in trade with East Asia, especially Greater China

9 China, lodestone of a new regional market? Direction of Total Manufacturing Trade AFTA (% of total) East Asia Japan Dev.East Asia Greater China AFTA NAFTA EU

10 China, lodestone of a new regional market? Share of Parts and Components in Manufacturing Exports (% of total) AFTA Indonesia Malaysia Philippines Singapore Thailand Series7

11 China, lodestone of a new regional market? Contribution of Parts and Components to Manufacturing Export Growth (% of total) East Asia Japan AFTA Indonesia Malaysia Philippines Singapore Thailand US Europe

12 China, lodestone of a new regional market? Direction of Parts and Components Exports from AFTA (% of total) East Asia Japan Dev. East Asia Greater China AFTA NAFTA EU

13 External Market Dependence Increases Final Goods Trade/ Parts and Components Trade (% total 2003) Final P&C Final P&C Final P&C Final P&C AFTA Developing East Asia NAFTA EU

14 External Market Dependence Increases Intra-regional trade growth in Asia is being driven by intensifying vertical specialization Production sharing has increased dependence on external markets Market driven integration: formal regional frameworks have had little impact on trade flows Region s stake in unfettered access to U.S and E.U markets and the multilateral system is accentuated

15 Future Rebalancing Generating internal demand: Cultivation of consumer majorities in Southeast Asian economies Capturing dynamics of emerging India and China through the evolution of a deeper and more inclusive Asian Free Trade Area Policymakers laying foundations, ASEAN+3 framework, AFTAC, embryonic Asian monetary fund Political dissonance and economic diversity remain key obstacles

16 Thank You Claire Innes Asia-Pacific Research Manager

17 The Premier Forum on the Direction of the Global Economy