Government debt in emerging Asian economies hit 50% of gross domestic product in the third quarter of last year, according to estimates by the Institute of International Finance, in a trend that suggests a regional shift away from fiscal conservatism. “Entering a financial crisis with a weak fiscal position worsens the depth and duration of the ensuing recession, particularly in emerging-market economies, because fiscal policy tends to be procyclical in these cases,” said Vitor Gaspar, director of the International Monetary Fund’s Fiscal Affairs Department. While government debt in emerging Asia is creeping up, it remains low compared with Japan’s 223.1% of GDP and 100.8% in the U.S. “The relatively low public debt gives the region more buffer against a potential global downturn, enabling policymakers to use expansionary fiscal policy to support demand,” said Frederic Neumann, co-head of Asian economic research at HSBC.
JAKARTA — Governments across Asia are seeking to bring millions of informal workers into regulated employment, and stem a major economic drag on the world’s fastest-growing region. Bangladesh, Indonesia and China have taken steps this month that could help formalize employment for a vast pool of workers that are struggling on the margins of their economies, many as self-employed merchants or agricultural laborers. The World Bank estimates that informal workers make up 47% of jobs in the East Asia and Pacific region, with the figure rising to between 60% and 80% in lower income countries such as Myanmar and Laos. The government in Dhaka last week signed a $250 million deal with the institution aimed at supporting efforts “to create large-scale, better-paid and inclusive jobs.”
KUALA LUMPUR — Malaysia is on track to achieving high-income status, according to the World Bank, while many of its Southeast Asian neighbors face the prospect of being caught in a middle-income trap. “Malaysia is well on its way to cross the threshold into high-income and developed country status over the coming years,” Victoria Kwakwa, the World Bank vice-president for East Asia and Pacific, said this month after meeting Prime Minister Mahathir Mohamad. Malaysia’s gross national income per capita has grown from $1,980 in 1981, when Mahathir first became prime minister, to $9,650 in 2017. Even so, the country still has some way to go to reach the World Bank’s developed country benchmark of $12,055. “As long as the country does not face growth stagnation, it is inching toward the high income level as defined by the World Bank,” said Yeah Kim Leng, Professor of Economics at Sunway University Business School in Kuala Lumpur. “Hence, it’s a question of when, give or take a couple of years, as long as it is able to sustain its current growth momentum.”
JAKARTA — Rising domestic spending across Asia is making many countries in the region less reliant on trade and foreign direct investment, providing them with a buffer against external shocks such as the ongoing tariff spat between Washington and Beijing. While goods imports to and exports from Asian countries rose 14.2% and 11.2%, respectively, in the five years through 2017, they declined relative to the wider economy due to the region’s continued world-beating growth, which hit 5.6% last year, according to new data from the United Nations Conference on Trade and Development. Fernando Cantu, senior statistician at UNCTAD, said the trade openness index (which measures the sum of exports and imports as a percentage of gross domestic product) in the Developing Asia and Oceania region declined to 25% last year from 35% in 2005.
JAKARTA — Rattled by rapid oil price swings in recent months, Southeast Asian economies are on tenterhooks ahead of an OPEC meeting this week that is expected to result in a supply cut to boost prices. The recent plunge in prices — the benchmark Brent crude dipped under $60 a barrel last week — has benefited economies such as Indonesia and the Philippines that are net importers of oil. This is helping to blunt the inflationary effects of currency slides against the U.S. dollar in these countries, which are caught in the crossfire of the U.S.-China trade war. Oil rebounded as much as 5% on Monday after the U.S. and China agreed to a truce in their trade conflict. This latest move follows a 30% slide in crude last month, after it touched four-year highs at the start of October. While nations in the region welcome the break in trade tensions — Singaporean Prime Minister Lee Hsien Loong said on Sunday that he hoped to see the U.S. and China take further “constructive” steps — they have to be prepared for further volatility after the meeting of the oil producing cartel that starts on Thursday.
JAKARTA — Wages in Asia grew by an average of 3.5% last year, nearly ten times faster than the 0.4% increase seen among the wealthiest members of the Group of 20 countries, whose leaders will meet in Argentina later this week. Driven largely by Asian economies and China in particular, wages in the G-20’s emerging or developing economies — including Indonesia and India — have tripled overall in the two decades since the Asian financial crisis, according to a new report by the International Labour Organization. The disparity between developed countries such as Japan — where wages declined by 0.4% last year — and less-developed countries in Asia, is partly due to emerging economies growing much faster and enjoying lower inflation than other emerging or developing regions such as Africa, Latin America, Eastern Europe or the Middle East.
JAKARTA — Myanmar attracted the most foreign direct investment of any of the world’s so-called “least developed countries” in 2017, even as the nation’s reputation plummeted over its forced expulsion of tens of thousands of Rohingya Muslims. The $4.3 billion worth of realized FDI that went into the resource-rich Southeast Asian country put it on top of the global economy’s bottom division of 47 nations, according to a report by the United Nations Conference on Trade and Development. Myanmar edged out second-place Ethiopia, with Asian neighbors Cambodia and Bangladesh taking third and fifth spots. Even so the nations remain far behind Association of Southeast Asian Nations peers such as Indonesia and Vietnam.
JAKARTA — China is starting to build its largest offshore wind-power facility in the latest move in an accelerating shift in Asia away from solar to wind and other renewable energy sources. Work began in late October on the facility off Nanpeng Isle in China’s southern Guangdong Province. The project has a planned capacity of 400,000 kilowatts, and its developer, China General Nuclear Power Corporation, expects it to generate about 1.46 billion kilowatt hours of power annually when it goes on stream in 2020 Wood Mackenzie, an energy consultancy, sees wind-generated capacity in the region growing by a factor of 20 over the next decade, powered by Beijing’s plans for a 15-fold expansion. Guangdong plans to build 23 offshore wind farms by 2030, according to China’s official Xinhua News Agency. Meanwhile, Asia’s solar-powered electricity capacity is set to fall this year for the first time since 2001, as countries such as China cut subsidies.
NUSA DUA — U.S. Treasury Secretary Steven T. Mnuchin said Saturday that he was sticking with plans to attend a government-sponsored investment conference in Saudi Arabia this month despite the uproar over the disappearance of a prominent Saudi journalist, although he said he would reconsider that decision “if more information comes out.” Mnuchin said he was concerned about the fate of Saudi-born journalist Jamal Khashoggi, who entered the Saudi consulate in Istanbul, Turkey, last week and has not been seen since. Turkish investigators say Khashoggi, a well-connected Washington Post columnist who had become a critic of the powerful Saudi crown prince, was killed and his body dismembered by an elite Saudi security team. Saudi officials say Khashoggi left the consulate freely, but have not substantiated their claim.
NUSA DUA — Asia is not yet feeling the effects of growing trade friction between China and the U.S., due to the internal strengths of the region’s “solid” economies, according to Takehiko Nakao, president of the Asian Development Bank. The trade dispute “is not as damaging right away,” Nakao told the Nikkei Asian Review on the sidelines of the International Monetary Fund-World Bank meetings being held in Nusa Dua on the Indonesian island of Bali. “The Asian economies are solid,” Nakao said, but he also warned that any escalation of the tariff war between the world’s two biggest economies could hit Asian exporters hard. “If it escalates, if it damages supply chains, as East Asia is connected to [global] supply chains, it could have a dire impact,” Nakao said. The fear is that complex supply chains, in which multinational companies make or source parts for finished goods in countries across Asia before final assembly, often in China, could be disrupted. But for now, domestic demand within Asia’s bigger economies could offset the impact of the trade restrictions, Nakao said earlier at the forum.