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p. 2 of 44 BACK | NEXT Country Reports East and Central Asia Azerbaijan People’s Republic of China Kazakhstan Republic of Korea Kyrgyz Republic Mongolia Tajikistan Turkmenistan Uzbekistan Mekong Pacific South Asia Southeast Asia

Annual Report 2002

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East and Central Asia

• Azerbaijan
• People’s Republic of China
• Kazakhstan
• Republic of Korea
• Kyrgyz Republic
• Mongolia
• Tajikistan
• Turkmenistan
• Uzbekistan

ADB’s new East and Central Asia Department covers a large and diverse region. Because economic performance across the region is not uniform, in this short regional overview, the three East Asia DMCs with ongoing operations—People’s Republic of China (PRC), Republic of Korea, and Mongolia—are discussed individually, after the six DMCs with ongoing operations in what ADB groups as Central Asia.

Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan had overall positive growth in 2002. Inflation was low overall, fiscal balances improved, and current account balances were manageable, despite the persistent slowdown of major world economies and further uncertainty shrouding recovery prospects. For the six DMCs, gross domestic product (GDP) growth averaged 7.7% in 2002, which was lower than rates in 2001 and 2000. The average inflation rate was about 12.3%, the second consecutive year of decline. The fiscal balance remained the same, exports improved, and imports declined for some countries, resulting in current account deficits of close to 2.1% of GDP, compared with about 3.3% in 2001.

With the opening of the trade sector after accession to the World Trade Organization (WTO) and the strong growth of private consumption and investment, the PRC continued its rapid economic growth in 2002. GDP growth rose to 8.0% in 2002 slightly higher than the recent 5-year average of 7.8%. Industry was the key engine of economic growth. Despite a spring drought, agriculture sector performance in 2002 improved slightly. A shift in exports toward high-tech products was noticeable, and exports and imports rose significantly.

The Republic of Korea continued its economic recovery in 2002, with real GDP growth of 6.3%. The services sector made the strongest contribution, followed by the manufacturing sector.

Mongolia’s GDP grew at 3.9% in 2002, breaking 2 years of stagnation. Inflation slowed from 8% in 2001 to 1.6% in 2002. Imports outpaced exports, leading to a trade balance of about 20% of GDP. The fiscal balance was contained at 5.7% of GDP, below the Government’s target.

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