Download Recent Development and Outlook:  ASEAN+3 Economies Reza Siregar  Group Head/Lead Economist

Recent Development and Outlook: ASEAN+3 Economies
Reza Siregar Group Head/Lead Economist
ASEAN+3 Macroeconomic Research Office
ESCAP‐Bank Indonesia High‐level Policy Dialogue Macroeconomic Policies for Sustainable Growth with Equity
15‐17 May 2013, Yogyakarta
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List of Issues
1. Recent Development
 Growths of Advanced Economies
 Economic Growths and Balance of Payments of ASEAN+3
 Capital Flows
2. Risks and Vulnerabilities
 Financial Stability
 Price Stability
 Growth Stability
3. Recent Situation in Japan
20/05/2013
1
Recent Development & Outlook Weekly 10‐Y Sovereign Yield‐Spreads over German 10‐Y Bonds (bps)
•
Tail risks in global financial markets receded, underpinned by extraordinary policy support
•
Global liquidity and central bank activities have yet to improve the real economy
•
Quantitative measures are expected to continue
GDP Growth Rates of Major Advanced Economies (q‐o‐q annualized growth, %)
%
%
3
6
2
4
1
2
0
0
-1
-2
-2
-4
-3
Manufacturing PMIs of Major Advanced Economies -6
France
Portugal
U.S. (SAAR), RHS
-4
Germany
Spain
-5
-8
-10
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2008
2009
2010
2011
2012
Source: National authorities
2
Recent Development & Outlook • Regional economic growth picked‐up in the final quarter of 2012 and growth should remain positive in the first half of 2013.
Real GDP Growth Rates Brunei Darussalam
Cambodia†
China
Q/
Q SA
Hong Kong SAR
Indonesia
Japan
SAAR
Korea
Lao PDR†
Malaysia
Myanmar†
Philippines
Singapore
SAAR
Thailand
Vietnam
1H
3Q
0.9
n.a.
7.8
‐
0.9
6.3
3.6
‐
2.5
n.a.
5.4
n.a.
6.2
1.9
‐
2.3
4.4
0.1
n.a.
7.4
2.1
1.4
6.2
0.4
‐3.7
1.5
n.a.
5.2
n.a.
7.2
0.0
‐4.6
3.1
5.4
2012
4Q
Year
Annual change (%)
n.a.
1.0(I)
n.a.
7.3e/
7.9
7.8
2.0
‐
2.5
1.4
6.1
6.2
0.5
2.0
0.2
‐
1.5
2.0
n.a.
8.0e/
6.4
5.6
n.a.
6.3(II)
6.8
6.6
1.5
1.3
3.3
‐
18.9
6.4
5.5
5.0
Industrial Production Indices , Selected Economies
2013
Yeare/
1.8(I)
7.0
7.5
‐
1.5 – 3.5
6.2 – 6.6
2.5(III)
‐
2.6
7.7(I)
5.0 – 6.0
6.5(III)
6.0 – 7.0
1.0 – 3.0
‐
4.5 – 5.5
5.5
3
Recent Developments and Outlook
•
Regional BoP position stayed in surplus in 2012, with foreign reserves around US$6 trillion.
•
Regional current account surplus narrowed last year mainly due to trade surpluses (deficits) being reduced (widened) across most A+3 economies because of strong import growth.
ASEAN+3: Current Account Balances, End‐2012
Yearly
Quarterly
USD bn
2010
2011
Plus‐3 (ex‐Hong Kong)
ASEAN (ex‐Singapore)
imports, % yoy
Jan
Mar
Jul
2012
Nov
60.0
50.0
40.0
30.0
20.0
10.0
0.0
‐10.0
‐20.0
Sep
May
Jan
Mar
Nov
Jul
Sep
May
Jan
Nov
Jul
Sep
May
Jan
Mar
Mar
Trade balance, by subregion
60
50
40
30
20
10
0
‐10
‐20
‐30
‐40
2013
Hong Kong & Singapore
exports, % yoy
4
Recent Developments and Outlook
•
•
Net private portfolio inflows in other regional economies surged in January, and peaked in February 2013
The composition and pace of capital inflows differ across economies in the region
Net capital outflows were recorded in China, Thailand, Vietnam towards end‐Mar/early‐Apr ‘13
China
Thailand
Vietnam
Hong Kong and Singapore continue to benefit from net capital inflows, albeit at a sharply slower pace
Hong Kong SAR
Singapore
In Philippines, Korea, Indonesia and Malaysia, net capital flows were relatively more volatile, alternating between inflows and outflows
Philippines
Korea
Indonesia
Malaysia
5
Source: EPFR
5
Risks and Vulnerabilities: Financial Stability
Domestic (Private) Credit Growth
•
Despite policies to curb excessive domestic credit growth, the rate of credit growth in some regional economies is fairly buoyant.
Residential Property Prices, Selected Economies
•
•
Continuing global liquidity infusion risks asset price increases in regional economies, particularly in Hong Kong and Singapore.
Macro‐prudential measures on cooling down property markets have been implemented in these economies to maintain financial stability.
6
Risks and Vulnerabilities: Financial Stability
Outstanding International Debt Securities by Nationality of Issuer: by Corporates
•
Local corporates take advantage of ample global liquidity and issue more international debt in recent years.
Yield Compression of Local Currency Debt of three Regional Economies (Korea, Malaysia and Thailand)
•
•
With the reduction in global tail risks , there could be upward pressure on government bond yields as investors move into higher yielding, riskier assets. Sudden surge and sharp reversal of risk appetite towards Asia would undermine regional financial stability.
7
Fiscal Performance:
Global monetary condition may have substantial effects on fiscal position • Accommodative global monetary policy may help lower financing costs through lower interest payments.
• AMRO estimates on one ASEAN economy, for example, show that on average the annual fiscal saving in 2009‐2011 due to lower global interest rates amounted to about 1.0 percent of GDP. • An opportunity for building‐up fiscal space for capital spending and future fiscal stimulus, if warranted.
Table: Fiscal Saving in an ASEAN economy due to Lower Global Interest Rates (% of GDP)
2009
2010
2011
Average
Interest rate effect on external debt
0.86
0.74
0.64
0.75
Interest rate effect on domestic debt
0.21
0.16
0.28
0.22
1.07
0.89
0.92
0.96
Total Effects
Source: AMRO Staff Calculation
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Risks and Vulnerabilities: Growth
•
Given fiscal headwinds in the US and Europe, and transition to a more sustained growth in China, the outlook for regional economies hinges on the support to domestic and regional demand.
Labor Market Conditions, Selected Economies
• Growth is expected to be capacity‐
constrained in several regional economies.
China’s Export Orders (from PMI) vs. Regional Export Growth
9
Risks and Vulnerabilities: Competitiveness
Nominal and real trade‐weighted exchange rates of selected regional economies
Nominal trade‐weighted exchange rate,
Selected Economies
Real trade‐weighted exchange rate,
Selected Economies
10
Risks and Vulnerabilities: Trade Financing & Regional Banking Activities
• Eurozone banks withdrawals have been replaced by regional banks. • Regional banks have increased their shares of trade financing in ASEAN.
• Cross‐border activities of these regional banks need to be closely monitored.
Table: Bank Claims vis‐à‐vis ASEAN Table: Top‐10 Global Trade Finance Arrangers in 2012 Arranger
Mitsubishi UFJ Financial Group
HSBC
JPMorgan
Citi
ING
Sumitomo Mitsui Financial Group
Mizuho
BNP Paribas
BBVA
Deutsche Bank
Value (in US$ bn) Deals % Share
11.96
99
7.0
10.51 108
6.2
7.14
51
4.2
6.48
71
3.8
6.36
69
3.7
6.10
78
3.6
5.69
62
3.3
5.50
71
3.2
4.47 174
2.6
4.43
66
2.6
Source: Dealogic Database
11
Recent Situation in Japan
•
Manufacturing activities and consumer confidence in Japan have improved significantly since December last year following Prime Minister Abe’s commitment to revive stalling economic growth in Japan.
•
The adoption of a new price stability target is part of the 3 arrows of the Prime Minister’s key economic policies.
3 arrows of Prime Minister Abe’s economic policies
Japan: Manufacturing PMI and Consumer Confidence
• Expansion in fiscal stimulus
‐
¥5.29 trillion is to be allocated to public works (e.g. infrastructure projects in order to prevent obsolescence and disaster) – an increase of ¥0.71 trillion from the previous year
• Bold monetary policy
‐
BOJ introduced “quantitative and qualitative monetary easing” on 4 April 2013, where monthly flow of JGB purchases is doubled
• Structural reforms
‐
Detailed economic growth strategy to be announced in June. At present, the outline of structural reforms includes women’s more active participation into workforce and TPP negotiation
12
Recent Situation in Japan
•
Net purchase of domestic securities by non‐resident was reported in early 2013.
•
We have seen a surge of net selling of foreign securities by residents since end of January 2013. •
It remains to be seen whether the risk appetite of Japanese investors will recover in the coming months. New fiscal (accounting) year starts on April 1. Net inflows
Net outflows
Net inflows
Net outflows
20/05/2013
13
Thank You
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