Economic recovery in Asia: growth and risks

After the crisis, Asia’s major economies back to overall growth track. Among them, Mainland China, Taiwan, Singapore and the Philippines and other economies, the economic strength of a larger reversal in the first half of 2010 were double-digit growth. Japan’s recovery is relatively slow, weak economic growth. Other countries and regions, while the rate of growth exceeded 5%.

Asian regional economy, future growth will be the main driving force in developing regions, while the export contribution will be relatively diminished.

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From early 2010 to early 2011, in our study sample of ten Asian countries and regions, except China and Japan, the stock market index of the other eight had a positive return. Among them, the best performance in Thailand and the Philippines, the annual return rate of over 30% of the index, the highest was more than 40%. South Korea and Malaysia, followed by the annual index rate of return of 20% or so. Taiwan, Singapore, Hong Kong and India in the middle and lower reaches, the annual index return of 10%. If the performance of the capital market as the economy as a leading indicator of future trends, then we can basically judge the overall economic recovery in Asia is more obvious, even if the observation of the situation in Japan and China, in the second half of 2010, the two countries weakening of the stock index is strong.

Similar to last year, we investigated the recovery of the bankers of different countries, the dependence of their own, and their respective economic stimulus effect. The results showed that the two indicators in mainland China is still standing in the front. Meanwhile, Hong Kong, Singapore, and the effects of policies in India have also given a higher rating.

Interview, we invite bankers of the ten sample countries and regions in Asia, the performance of economic recovery and economic structures and development models give their subjective evaluation, the results show that the recovery performance of mainland China is the highest score, but In the economic structure and development model is in the middle lower level. More prominent, the South Korean model of development by most of the banker’s home.

Governments are starting to withdraw from the policy process, we also investigated the views of bankers related. Bankers generally agreed that the pace of the withdrawal of Singapore is the fastest, while the impact on the economy is the best. The pace of China’s exit is the views of bankers go the slowest. In effect, the Japanese have recognized the lowest, while Korea, Thailand, Malaysia and the Philippines, also in their evaluation of the negative bias. China, Hong Kong, and Taiwan remained in the neutral level.

We will turn from economic growth, inflation trends, money supply and changes in policy measures and characteristics of the study sample of 10 countries and regions to do synoptic description.

First, the Chinese mainland

China’s economic growth from the financial crisis before the date, show clear V-shaped reversal in early 2009, economic growth point of contact to the lowest 6.1%. Then, quarter by quarter economic growth picked up to reach high point in early 2010, with the flat before the crisis (11.90%). 2010, gradually increase the risk of inflation, then economic growth has slowed, slightly less than 10%.

China is facing inflationary pressure is very large, since the beginning of 2010, CPI has increased by nearly 4 percentage points, as a whole, at the rally. In 2011, inflation will also be the biggest risk to China’s economy. Inflationary pressures for China’s central bank has taken a series of combined measures. Since early 2010, the central bank has raised the deposit reserve 8 times the reserve has reached a record 19.5%. Meanwhile, the three raised the benchmark interest rate increase of 0.75 percentage points. The central bank has paid attention to the market to control money supply, can be found, M2 growth has declined from 25% in early 2010, dropped to about 17% of early 2011, a decline is still very obvious.

Second, Japan

Japan’s economy from the second quarter of 2008, up to 7 months into a row of negative growth, the most serious first quarter of 2009, negative growth was 10.3%. Subsequently, the negative growth rate gradually slowed down until well into 2010, economic growth turned positive, but difficult to see the trend of stable and sustained, the road to recovery is not very flat, narrow twists and turns in the rate of increase, from 5.6% in the first quarter, 2.2% in the fourth quarter.

Japan is still no need to think too much about inflation, money supply growth is slowing, making Japan the first issues to consider now is deflation. CPI in the second half of 2010 just from negative to positive, but not maintained, the last three months, CPI lasted only zero growth.

Interest rates, the Japanese monetary authorities in late 2008 raised the target rate of 0.1% of the low level, still maintaining the level of interest rates unchanged.

Third, Hong Kong, China

Hong Kong’s economy in 2010 also took a more robust recovery. In the fourth quarter of 2008 through to 2009 third quarter, four consecutive quarters of negative economic growth, full recovery began in late 2009. In addition to the first quarter of 2010 reached 8.1% year on year GDP growth in the next three months, the recovery is very stable performance, the growth rate maintained at above 6%.

Although the current CPI level of Hong Kong (January 2011 to 3.6), asserted that inflation may be too early, but it must be noted that the trend has been formed. Year CPI growth rate has been increased for 5 consecutive months, the situation showed the need to remain vigilant. Meanwhile, money supply growth also appears monthly base table rise, the market liquidity continued to be added to the future trend of CPI has brought a certain amount of pressure.
Meanwhile, Hong Kong’s linked exchange rate system to make the independence of its interest rate policy less, not as the benchmark interest rate upward adjustment of the economic recovery, the current level of less than 0.2%.

Therefore, there is a potential Hong Kong has the inflation risks, especially of imported inflation on Hong Kong’s future economic potential adverse effects. Respondents to a banker in Hong Kong, said: “In addition to the United States, products from other regions of the prices, while Hong Kong’s food and food produce from the mainland, so for Hong Kong, imported inflation can not be avoided. In addition, whether it is residential, office or shops, rent is rising. Hong Kong has also recently introduced minimum wage, coupled with the HKSAR Government’s SME program expires at the end, the SME’s operations will be affected. Therefore, inflation below the Bank for The unemployment rate, corporate bankruptcies as well as the status of individual loans, will continue to follow up observation. “

Fourth, China Taiwan

Taiwan’s economy when the crisis had lasted five quarters of negative growth. Until the fourth quarter of 2009, returned to positive growth and strength of the recovery is very strong. The first three quarters of 2010, Taiwan was the recovery of all maintained double-digit rate. But note that, by 2010, Taiwan’s overall slow recovery in the case preached, 13.59% from the first quarter, all the way down to four quarters of 6.92%.

In inflation, Taiwan is still without too much concern. Although the process of recovery from the crisis in, CPI from negative to positive, and the continued growth of 3 months, while the money supply also showed signs of acceleration, but as of now, no more than the required level of alert. In November 2010 the high point of the stage reached 1.52%, CPI but turned down, inflation pressure is weak.

Five, Singapore

Singapore affected by the global economic crisis, the economy in late 2008 to early 2009, has experienced negative growth for three consecutive months, as well as one month and growing. Compared to Japan, Hong Kong, Taiwan and other economies, Singapore’s lesser extent affected by the crisis, the duration is relatively short. 2009, Singapore has entered a recovery track. First two quarters of 2010, GDP reached 16.4% year on year increase and 19.4%, the performance beyond many people’s expectations. The next two quarters, economic growth is very slow, but still maintained double-digit, recovery has been very strong.

However, the process of economic recovery in Singapore, the biggest risk comes from inflation. January 2010, Singapore’s CPI was 0.2%, basically zero inflation. But in 2011, CPI has reached 5.5%, above the alert level, the trend is worrying. Second half of 2010, Singapore’s economic growth pace slowed dramatically, but also associated with the risk of inflation worries.

Singapore’s money supply has no obvious speed, taking into account future inflation, M2 growth rate in the months of the end of 2010, began to slow down. Rates were still maintained a level close to 0.

Six, South Korea

1998 may be drawing on the lessons of the Asian financial crisis, South Korea in this round of global economic crisis, the extent of the recession is not very large, experienced from the fourth quarter of 2008 to second quarter of 2009, three consecutive quarters negative growth (the most serious is that the first quarter of 2009, -4.3%), and soon the middle of 2009, entered a growth track. The recovery in 2010 is very good, even more than the average growth rate of pre-crisis levels. However, quarterly distribution, and Singapore is very similar to the present situation of high to low, and stabilize in the fourth quarter of 2010.

South Korea’s CPI in October 2010 and January 2011 more than 4% twice, the potential inflation risks need attention. South Korea’s monetary authorities should also note that the monthly CPI rise in recent months, so control of the money supply also maintained a cautious attitude, M2 growth has been declining year on year to a level below 6%.

South Korean central bank after the crisis, also raised its benchmark interest rate several times, which also aims to address the possible arrival of the recovery process of inflation.

VII, India

V-shaped recovery in the Indian economy is obvious. By the most profound global economic crisis in the fourth quarter of 2008, GDP grew only 3.01% to achieve. Then began to gradually recover, the growth rate increase significantly. Three quarters of 2010, India maintained a double-digit growth, respectively, 11.22%, 10.28 and 10.56%, and the momentum is very strong in the fourth quarter was somewhat lower growth rate moderated to 8.2%.

India’s inflation has continued at double-digit level, but in 2010 the basic downward trend in the risk of inflation is slightly released, but overall risk is still, mainly because of higher money supply growth, the end of 2010 maintained at levels above 18% year on year, therefore, in the end of the year, CPI has a “rise” signs. In response to inflation, India’s central bank also launched the pace of rate hikes in 2010, the Indian central bank’s main policy tool of the repo rate, up nearly 2 percentage points.

VIII, Thailand

Thailand’s economy has in the past the worst of times, the second half of 2009, and gradually return to growth track. First quarter of 2010, is to achieve 12.02% of the GDP grew a strong rebound. However, the next three quarters, growth has slowed quarter by quarter, the downward trend is obvious. This phenomenon, in addition to economic reasons, political instability also can not be ignored. Thailand’s economic recovery, the road is not particularly smooth, continuous concern.

On the current data, inflation in Thailand, but also relatively weak. CPI in 2010 from more than 4% and gradually fell to around 3%, inflation risks are relatively controllable, yet without too much worry.
Requires special attention is the money supply. The year 2010, Thailand’s M2 growth rate increased continuously, has now reached double digits, and lasted three months have not been down this potential inflation risks to the future foreshadowed. If the excessive money supply continues, it is difficult to avoid the inflationary consequences of rising channel restart.

IX, Malaysia

Malaysia’s economic recovery is very similar to the road with Thailand. After the first three quarters of 2009 after negative growth, it embarked on the road to recovery. Achieve positive economic growth in late 2009, early 2010 to further accelerate growth to double digits. GDP growth next year but has slowed quarter by quarter, to the beginning of the end of the growth rate has dropped to less than the general level of sustainability of the recovery of concern.

The absolute level of inflation in Malaysia is still below the level in the security line, the latest CPI just over 2%. But more noteworthy is the trend in question. Since the beginning of 2010, CPI has been in a rising channel, an increase of close to double that to 2011, not a small pressure.

Malaysia’s monetary authorities to be vigilant to inflation risks. M2 growth rate was somewhat lower in the second half of 2010, to some extent part of the release of inflation in 2011.

Ten, the Philippines

Philippines, economic recovery is cause for concern. As a general economy of scale is not large, the Philippines, when the worst of the crisis, still maintained a positive economic growth. And, in 2010, the Philippine economy is more to achieve the jump in growth rate to remain high throughout the year basically, does not appear as Thailand and Malaysia-style “high to low,” the downward trend, the recovery momentum is still very strong , even more than the pre-crisis levels.

Inflation, the Philippine authorities are also more reasonable control, the overall CPI showed a downward trend throughout the year, years, has dropped to 3%. The end of 2010, CPI rise slightly to 3%.

Philippine monetary authorities with the money supply, M2 growth rate, can be found, the Philippines and the M2 growth rate of CPI is more consistent pace. End of 2010, the CPI rise, and M2 appeared in previous waves of a certain relationship between growth acceleration

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