Asian growth set to be more moderate, but above all more balanced

The Asian emerging markets grew by 7.4% in real terms last year. In 2010, a year that was characterized by a strong global rebound from the previous severe recession, economic growth had come in at as much as 9.6%. The more subdued performance seen in 2011 is attributable to weaker global trade growth, which came in at only 5.6% compared with growth bordering on 15% in 2010. There are several reasons behind this development: first of all, the slowdown in world trade momentum has to be seen, at least in part, as a “return to normal”. Second, however, it also reflects the very subdued economic development in the industrialized countries. And last but not least, world trade took a significant knock, at least temporarily, as a result of the natural and reactor catastrophe in Japan in the spring, and the flooding disaster in Thailand in the fall of last year. In both cases, interruptions of international supply chains resulted in severe production losses. Large parts of the Thai economy, for example, came to a standstill in the fourth quarter of 2011, with real gross domestic product plummeting by almost 11% quarter-on-quarter in seasonally adjusted terms.

Given weaker export momentum coupled with mostly solid import demand, countries such as China, India and Thailand actually recorded negative net exports last year. According to calculations performed by the Asian Development Bank (ADB), the growth contribution from external trade in China’s case was -0.2 percentage points in 2011. In India, the negative contribution was as much as 1.8 percentage points. In many countries, however, private consumption started to deliver increasing growth impetus. In 2011, Chinese private consumption contributed more than 3 percentage points to economic growth of 9.2%, compared with a contribution of only 2.1 percentage points one year earlier, although real GDP growth was higher at 10.4%.

Download PDF (235 kb)