China, Korea Driving East Asia/Pacific Economic Resurgence
A few interesting tidbits from the World Bank’s latest biannual East Asia and the Pacific Update:
- The ratio of exports to GDP has risen only in Korea
- Korea’s companies gained global market share as others in Asia stumbled
- Korea’s Hyundai has increased its share in the U.S. by almost 50% during the crisis (see also Korean Automakers Benefitting from Clunker Schemes)
- Vehicle sales in China have surpassed those in the U.S.
- China has overtaken Germany as the world’s largest exporter (in percent of world exports)
- Due to the crisis, 14 million more people will be in poverty by 2010
East Asia’s rebound from the economic downturn has been surprisingly swift and very welcome, the report notes. “A year ago, exports and industrial production fell sharply across the region, layoffs were on the rise, and capital flowed out weakening asset prices and currencies. A vigorous and timely fiscal and monetary stimulus in most countries in East Asia, led by China and Korea, along with decisive measures in developed economies to prevent a financial meltdown after the collapse of Lehman Brothers, have stopped the decline in activity and set in motion the regional rebound. The shift to inventory restocking since mid-2009 has also helped boost growth. These factors have led us to revise our projection for real GDP growth in developing East Asia up by 1.3 percentage points since the previous forecast in April.”
All in all, real GDP growth is set to slow to 6.7 percent in 2009 from 8 percent in 2008, or much more moderately than after the 1997-98 Asian financial crisis.
The report also documents China’s central role in pulling the region out of recession.
FTAlphaville notes that China’s current account surplus will fall from 9.8% of GDP to 5.6% this year and 4.1% in 2010, according to the report.” The forecast will potentially bolster Beijing’s resistance to appeals expected from US President Barack Obama for renminbi appreciation. A rapidly falling surplus would also signal some rebalancing of the Chinese economy. In its latest quarterly report on China, the Bank also said that growth would reach 8.4%, up from its forecast 7.2% in June, followed by 8.7% next year.”
FTAlphaville also has an interesting analysis from Radiant Asset Management’s David Ross on the US debt to GDP balance and China.
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