Catalog

	Table of Contents
p. 3 of 68 BACK | NEXT I. Developing Asia and the World Overview of Economic Trends and Prospects Overview of Economic Trends in Developing Asia in 2002 Macroeconomic Conditions in 2002 Outlook for Industrial Countries Developing Asia: Subregional Trends and Prospects Developing Asia: Risks and Uncertainties Overview of Fiscal Policy in Developing Asia II. Economic Trends and Prospects in Developing Asia III. Competitiveness in Developing Asia Statistical Appendix

Asian Development Outlook 2003 : I. Developing Asia and the World : Overview of Economic Trends and Prospects

---

Overview of Economic Trends in Developing Asia in 2002

In 2002, growth in developing Asia strengthened compared with the previous year, and economic performance gained momentum as the year unfolded (Table 1.1). In most countries, export growth accelerated and domestic demand remained strong while, except in the Pacific, inflation subsided. Consumption expenditures grew strongly in the People's Republic of China (PRC), Republic of Korea (Korea), India, Indonesia, Malaysia, Philippines, Thailand, and Viet Nam. In contrast, business investment continued to decline in most East and Southeast Asian economies, due to a combination of uncertainty and overcapacity. Notable exceptions were the PRC, Korea, Lao People's Democratic Republic (Lao PDR), Malaysia, Viet Nam, and to a lesser extent, Thailand. In South Asia, investment showed positive growth except in the Maldives and Pakistan. Export growth, which increased more rapidly in the second half of the year, was also notable in largely the same economies, particularly Cambodia; PRC; India; Korea; Malaysia; Philippines; Taipei,China; Thailand; Viet Nam; and several Central Asian republics (CARs). The US dollar value of exports increased by 9.4%, a substantial reversal from the almost 7% decline in 2001 and nearly double the Asian Development Bank (ADB) forecasts made in early 2002. In terms of overall growth performance, the PRC and Korea had the best record in East Asia; Lao PDR, Thailand, and Viet Nam in Southeast Asia; Bhutan in South Asia; and Azerbaijan, Kazakhstan, Tajikistan, and Turkmenistan in Central Asia. In the Pacific, the performance of the Fiji Islands and the Marshall Islands stood out. In 19 DMCs, output grew at a rate of 4.0% or more. Still, in spite of this performance, growth in most DMCs remained below its long-term potential, and in many of the smaller and poorer DMCs, growth was insufficient to substantially raise income and reduce poverty. This was also true in a few of the large countries.

Inflation in developing Asia remained low despite the acceleration in growth, averaging 1.4% compared with 2.4% in 2001. There was high inflation in a few countries such as Indonesia, Lao PDR, Papua New Guinea, Sri Lanka, Tajikistan, Tonga, and Uzbekistan.

Fiscal deficits remained common throughout Asia. The economies most affected by the 1997-98 financial crisis continued fiscal expansion to strengthen their recovery, while structural deficits persisted in some countries. Throughout the region, budgetary stances are coming under increasing scrutiny and efforts are under way toward fiscal consolidation (see the section, An Overview of Fiscal Policy in Developing Asia, below).

With the exception of the Pacific, external balances improved in 2002 as surpluses on both the trade and current accounts increased, and the deficits in Central Asia narrowed. Exports grew faster than imports, and the region's aggregate current account surplus increased from 2.9% of GDP in 2001 to 3.6% in 2002. The region thus continued to accumulate international reserves in 2002 (Box 1.1). One of the important reasons for the buoyancy of exports in several countries appears to be rapidly increasing exports to the PRC, partly as a result of the reforms associated with World Trade Organization (WTO) entry of the PRC (Box 1.2).

Back Overview of Economic Trends and Prospects	Next Macroeconomic Conditions in 2002