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August / September Asia
Recovering East Asia lacks quality growth
Although developing countries in East Asia are recovering from the regional economic crisis, many states are not delivering "quality growth" to their citizens, a leading World Bank official said in Bangkok recently.
"Quantity and quality need to go together for real growth," a combination which has not always occurred in developing East Asia, said Vinod Thomas, vice president of the World Bank Institute, the bank's training arm.
"Through Thailand ranked seventh in the world in GDP per capital growth over the past quarter century, there is considerable discussion among the public about the value of this growth," he said.
Much of Thailand, Indonesia and other Southeast Asian states' apparent gross domestic product (GDP) growth has been negated by the concurrent destruction of the environment and inequality in access to education, Thomas said.
"The size of a human body grows the more you consume, but the composition of the diet maters more," he said, referring to this ecological destruction.
In several South and Southeast Asian states, especially India and Indonesia, access to education had not improved over the past quarter century, he said.
"No country has achieved sustained growth without substantial and efficient investments in education."
Thomas was speaking at the launch of a World Bank funded study called "The quality of Growth".
The study analysed to what extent developing states had embraced qualitative growth such as income distribution and environmental protection.
Despite environmental and educational problems, developing East Asian has made inroads towards producing high quality growth, Thomas said.
Over the 10 year period that the World Bank studied, the percentage of the East Asian population living in poverty fell from 26.6 percent to 15.3 percent.
The World Bank defines poverty as an individual living on less than one dollar per day.
"The last decade of the 20th century witnessed striking progress in many parts of the world," said Thomas.
In order to further reduce poverty and improve quality of life, states must address qualitative aspects of growth such as greater security of life and a more sustainable environment, the study said.
"Some lower income countries say, Why not growth first, clean up later? Why not worry about inequality later?' But this is not a tenable strategy," Thomas said.
The World Bank believes this broadening of the definition of growth will pay dividends.
"For example, less air and water pollution or less degradation of natural resources can be extremely beneficial to the welfare of the poor because of the positive effects on their health," the study said.
Industrial output up by 12.8% in China
China's industrial output grew 12.8% year on year in July, the highest rise since January last year, driven by continued strong exports to recovering economies in Asia.
Industrial production totaled 196 billion Yuan (23.6 billion dollars) in July, according to the National Bureau of Statistics. In the first seven months of the year, it rose 11.4 percent from the same period last year to reach 1.3 trillion yuan (157 billion dollars).
"The pickup in production is export driven," said Denise Yam, a researcher with Morgan Stanley Deam Witter in Hong Kong. "Economic growth overall has been export driven."
Exports pushed China's economy to growth of 8.2 percent in the first half of the year, after recording a near-decaded low of 7.1 percent last year.
Just over half of output from China's industrial enterprises goes to overseas markets.
Exports of industrial products grew by 27.4 percent in July to 117.7 billion yuan (14.2 billion dollars), and increased 26.6 percent in the first seven months of the year from the same period in 1999.
Rising overseas shipments also have an indirect impact on the Chinese economy by raising incomes at export-oriented companies, boosting consumer demand.
China's exports, which grew 38.3 percent in the first half, have gained because companies, many of them with foreign investments, are again selling large amounts of goods to Asian countries that have recovered from the regional economic crists.
Japan's current account surplus falls 18.2 pc
Dearer oil imports depressed Japan's current account surplus in May by 18.2 percent year on year from a year earlier to 840.2 billion yen (7.9 billion dollars), the finance ministry said recently.
But imports from Asia also rose on stronger demand from Japanese consumers, a crucial indicator that Japan's decade long slump is coming to an end.
The May figures comprised a 723.4 billion yen surplus in trade of goods and services, a 589.4 billion yen surplus in financial income and a deficit of 67.2 billion yen in monetary transfers, the ministry said.
But the surplus in goods trade alone dropped 24.1 percent to 723.4 billion yen. with imports surging 20.5 percent to 2,979.6 billion yen and exports up a lesser 8.1 percent to 3,703.0 billion yen.
The current account surplus measures the flow of goods, services and investment income and other financial transfers.
"The decline in the trade surplus particularly pulled down the current account while both income and current (monetary) transfers barely changed, said Finance Ministry official Kenichi Habu. "The main reason for the fall in the trade surplus was higher crude oil prices, as this also led to higher prices of petroleum products." he said.
In May, crude oil cost 25.12 dollars per barrel on average, up a whooping 61.8 percent from a year earlier. The total value of crude oil imports shot up 55.5 percent, with that of petroleum products jumping 106.6 percent.
"But one can also notice early that the volume of imports from Asia is rising strongly. With this we can point to a recovery in domestic demand," added the ministry official.
Singapore hopes high economic growth
Economists took a bullish view of the Singapore economy recently forecasting it would steam ahead into 2001 on strong momentum for this year.
Sustained global growth and constituted improvement in Asian economies would continue to be the main drivers of growth amid fading worries of a fallout from a possible slowdown in the US economy, they said.
The Singapore economy grew a strong 8.8 percent in the first half, up from 3.7 percent a year ago, with 8.0 percent growth in the second quarter, up from 6.6 percent in 1999.
The forecast by Ministry of Trade and Industry (MTI) chief economist Tan Kong Yam that the economy would maintain its momentum through to the first half of next year, with growth projected to established at 6-7 percent in the second half of 2001, was meet with general agreement by economists.
The economy was not expected to overheat even though the unit labour cost (ULC), a measure of wage cost relative to output, jumped 3.1 percent year on year in the second quarter from a 0.3 percent rise in the first.
Wage pressure would most likely be felt in the information technology sector, he said.
The government's second quarter economic figures and revised fully year growth forecast of 7.5-8.5 percent, up from 5.5-7.5 percent previously, were officially released Thursday after being foreshadowed by prime Minister Goh Chok Tong on Tuesday in his National Day speech.
The only ailing sectors in Singapore's second quarter performance were construction and finance.
Construction sharank 9.8 percent year on year, following an 11.2 percent decline in the first quarter.
Out put in the financial services sector declined 1.2 percent, reversing a 12.4 percent surge in the first quarter, dragged down by a sharp fall in trading activity in the local stock market and fore trading.
Manufacturing a key pillar of the economy expanded from 13.1 percent growth in the first quarter to 13.7 percent in the second, led by the all important electronics segment which surged 23.9 percent from 21.7 percent previously.
Malaysian economy surges forward
Malaysia's economic growth has been charging ahead and government officials say that the political drama of former deputy prime Minister Anwar Ibrahim is unlikely to reverse it.
Anwar was convicted last week of sodomy, a move that could keep him out of politics for a generation. He has claimed that he is the victim of a conspiracy by his one-time mentor, Prime Minister Mahathir Mohamad. The government denies it.
Following positive recent figures from the Malaysia Institute of Economic Research showing foreign investors are interested in returning to Malaysia, officials have said that the Anwar case should have little impact on in vestor sentiment.
For the January to July period, foreign investment applications in the manufacturing sector mostly for electrical products soared to nearly 8.7 billion ring it (nearly dlrs 2.3 billion), recent MIER figures show.
That could ease concern expressed by analysts just a month ago who told Dow Jones Newswires that despite strengthening growth, foreign direct investment was limping at a pace which could endanger future expansion.
Malaysia needs continued foreign investment in manufacturing to power its newly won economic recovery, which saw gross domestic product expand 11.7 percent in the first quarter compared to the same period in 1999.
But approved applications can give a better indication of how much money flowed in as foreign manufacturing investment during any given year. Those figures are less than sensational this year.
Indonesia's economy out of crisis
Indonesia's economy has emerged from its worst crisis in decades but the recovery is still in its early stages and has yet to gain strength, President Abdurrahman Wahid said recently.
In a progress report to the People's Consultative Assembly (MPR) Wahid said the achievements in the nine months he has been in officer are "still too small."
The improvements, he said apologetically, had fallen short of the people's and the government's expectations.
Looking ahead, he said economic rehabilitation will be based on four main pillars maintaining macro economic stability, empowerment of economic institutions, structural policy reform, and protection of the poor.
And in the future, he said, the government will remain aware of the growing pressures on the state budget, such as pressure for higher wages, as well as the pressure of the government debt, now standing at some 71 billion dollars.
