UNITED NATIONS — “Asia Pacific economic economies will see subdued growth in 2013 after last year’s sharp slowdown caused by external factors,” is the prognosis from a recent UN survey.
“Economic growth in the developing countries of Asia and the Pacific slowed to 5.5 percent in 2012 as a result of the double-dip recession in the Euro zone and the tepid recovery of the U.S. economy,” the report advises.
The Economic and Social Survey of Asia and the Pacific/2013 outlines a cautious survey for the current year, “although growth is expected to inch up to 6 percent in 2013, this rate is still below the average of 7.8 percent achieved in 2010-2011 and the average of 8.6 percent observed during the pre-crisis period of 2002-2007.” The annual report is a product of the UN’s Bangkok-based Economic and Social Commission for Asia and the Pacific (ESCAP).
China’s economy has lost its much of its luster. While Beijing’s official growth rate for 2012, stood at 7.8 percent, this year the GDP is expected to grow slightly to 8 percent. Importantly India whose growth dipped dangerously to 5 percent in 2012 should climb back to 6.4 percent this year. Export oriented economies have seen significant drops in demand especially from the USA.
Much of the improvements rests on “improvement in global demand arising from steady, although sub-par, growth in the United States, and a limited rebound in the performance of major emerging economies.”
But beyond the numbers, Pingfan Hong, Chief of the Global Monitoring unit at the UN’s Department of Economic and Social Affairs (DESA) stressed, “although global financial markets had seen improvements in terms of equity prices, the ‘real economy’ lacked robust improvement.” China has slowed down, and “sluggish growth” was expected in South Korea. Seoul’s growth is expected to go from 2 percent in 2012 to only 2.3 percent this year.
Hong stated that “developing countries in Asia had suffered a loss of 3.7 percent in GDP over the last four or five years since the crisis had struck.”
The Survey suggests, “much lower growth compared to recent years could became a new normal for many regional economies if present economic trends were to continue.” Equally despite years of past progress, the Survey concedes that the Asia-Pacific region is still home to more than 800 million poor; in fact two-thirds of the word’s poor.
The survey advises, “the model of grow first, distribute and clean up later” was no longer acceptable. That’s so very true. Just view the environmental damage from China’s fast and polluting growth which seems blurred by a grey and choking haze enveloping most Mainland cities.
Nonetheless there still much impressive news from the region as the survey illustrates.
Southeast Asia is expected to gain from “improved, although still tepid global trade.” Indonesia is a regional powerhouse with growth expected to come in at 6.6 percent this year along with the Philippines at 6.2 percent and Thailand at 5.3 percent.
The survey suggests a number of measures which would help regional economies expand. For example, China should reduce its reliance on exports and expand its domestic consumption. The survey states this would spur inter-regional trade.
Significantly boosting China’s domestic consumption would help American exporters too. Despite all the feel good statistics we see regarding the China trade, the facts remains that while American exports to the Mainland are at an all time high at $110 billion, what is not said is that Chinese exports to the USA are all the much higher. In 2012, the USA hit a $315 billion deficit with the People’s Republic and that’s in a recession. The year before the U.S. trade deficit with Beijing stood at an unacceptable $295 billion.
Though the USA’s economic recovery and job creation remains tepid, expanding truly free trade with global partners can boost both American exports and the still underperforming U.S. economy. It’s about time we do so.