Southeast Asian Economic Outlook: With Perspectives on China and India Thematic focus: Narrowing development gaps 2013 edition November 2012, Bangkok, Thailand Kensuke Tanaka Head of Asia Desk OECD Development Centre Outlook recent development Regional partner: the ASEAN Secretariat Summit: ASEAN Business and Investment Summit in Phnom Penh on 18 November December 13 seminar in Paris 3 regional consultations (i.e. Jakarta, Seoul and Singapore)and country basis consultation
Outlook structure and thematic focus Part 1: Regional economic monitor Part 2: Structural policy country notes Part 3: Special thematic focus Special thematic focus 2010: Infrastructure and regional integration 2011/12: Green growth 2013: Narrowing development gaps 2014: Middle income traps (TBD) 2015 : Governance (TBD) Main findings of the forthcoming Southeast Asian Economic Outlook: with Perspectives on China and India
Outlook Key questions What growth prospects for Asia in 2012-2017? What does narrowing the development gaps in ASEAN countries mean? Structural policy challenges of Thailand as an example (from Structural policy country notes) What is the main message of the Outlook 2013? Southeast Asia shows resilience, though Emerging Asia, in particular China will begin to slow gradually Real GDP Growth of Southeast Asia, China and India (annual percentage changes) 2011 2017 2000 2007 2013 2017 ASEAN 6 countries Brunei 2.2 2.9 2.4 Indonesia 6.5 6.6 5.1 6.4 Malaysia 5.1 5.5 5.5 5.1 Philippines 3.9 5.3 4.9 5.5 Singapore 4.9 3.8 6.4 3.1 Thailand 0.1 5.3 5.1 5.1 CLMV countries Cambodia 7.1 7.3 9.6 6.9 Lao PDR 8.0 7.5 6.8 7.4 Myanmar 5.5 6.7 6.3 Viet Nam 5.9 6.3 7.6 5.6 ASEAN 10 average 4.6 5.8 5.5 (a) 5.5 CLMV average 6.0 6.5 7.8 (b) 5.9 Emerging Asia average 7.8 7.4 8.6 (a) 7.4 China and India China 9.2 8.0 10.5 8.3 India 6.8 7.0 7.1 6.4 Notes: The cut off date of data is 1 November 2012. a) The average number does not include Brunei and Myanmar. b) The average number does not include Myanmar. Source: OECD Development Centre, MPF 2013
The impact of global uncertainty, has become apparent but remains limited overall Southeast Asia s direct and indirect exposure to G3 (% of exports) Source: OECD Development Centres estimates Private consumption and investment will be the important drivers of growth Contributions to growth in Southeast Asia, China and India in the first half of 2012 (percentage of GDP) Note: *Data for Viet Nam and China refer to contribution to growth in 2011. Sources: CEIC and national sources.
Further development of middle class will require a shift in policies Middle class size versus school enrollment and public healthcare spending Notes: Latest year available: Cambodia, 2008; Indonesia, 2011; Lao PDR, 2008; Malaysia, 2009; the Philippines, 2009; Thailand, 2009; Viet Nam, 2008; China, 2008; India, 2009. In the case of Indonesia, China and India the latest figures of the size of the middle class are estimates combining the separate urban and rural distributions, weighted by share of urban/rural to total population. Source: OECD Development Centre`s calculation based on World Bank data. Fiscal capacity needs to be strengthen through better revenue mobilization Public debt (% of GDP) Overall tax efforts Sources: OECD Development Centre, MPF-2013 Sources: OECD Development Centre s estimates based on IMF (2011c); Budina and Tuladhar (2010).
Searching for new growth and development strategies Medium term development plans of ASEAN countries Country Period Theme/vision Cambodia 2009 13 For growth, employment, equity and efficiency Indonesia 2010 14 Towards the realisation of an Indonesia that is prosperous, democratic and just Malaysia 2011 15 Charting development towards a high income nation Philippines 2011 16 In pursuit of inclusive growth Singapore 2010 20 High skilled people, innovative economy, distinctive global city Thailand 2012 16 Philosophy of Sufficiency Economy Viet Nam 2011 15 Strong and sustainable growth by improving the quality and competitiveness of the economy Medium term structural policy challenges (1): from country notes Cambodia Indonesia Malaysia Philippines Agriculture Human capital development Reform of financial sector Infrastructure Education Social security reform Human capital development Labour market SME development Infrastructure Labour market Education Build agricultural productivity and tap the export potential of milled rice Increase enrolment rates at all levels of education and strengthen TVET to build a skilled labour force Strengthen the banking sector and prudential measures Narrow the regional divide by enhancing connectivity and the capacity of local government Strengthen the capacity of local government to provide education infrastructure Accelerate healthcare reform, in particular, increase coverage and access to healthcare services Strengthen TVET and the education system to address skills shortages Address weaknesses in labour market functioning Enhance productivity of SMEs Improve road transport, power and energy infrastructure and strengthen public and private investment Focus firmly on job creation strategies Improve access to quality education and training by strengthening K+12 programme Sources: OECD Development Centre, forthcoming Outlook
Medium term structural policy challenges (2): from country notes Singapore Labour market SME development Manage foreign worker dependence by increasing the productivity of local workforce Sustain SME growth through fostering entrepreneurial environment Innovation Enhance the innovation capabilities of local enterprises Thailand Viet Nam Education Healthcare system Green economy Human capital development Development of banking sector SOEs reform Raise the quality of education and reduce disparities Achieve a more equitable healthcare system Foster green growth through investment and fiscal reforms Reform training and education to better meet demand for skilled labour Strengthen the banking system by establishing effective supervision Strengthen market based reforms and monitoring of SOEs Sources: OECD Development Centre, forthcoming Outlook Thailand s medium term policy challenges Education Raise the quality of education and reduce disparities Healthcare system Achieve a more equitable healthcare system Green growth Foster green growth through investment and fiscal reform
Disparities among countries: Greater efforts are required in poverty and human capital development ASEAN OECD Narrowing Development Gap Indicators (NDGIs): disparities between ASEAN 6 and CLMV countries 2005 2011 Note: Due to data availability the sub-indices for infrastructure, human resource development, ICT and regional economic integration are not fully comparable between 2005 and 2011. Source: OECD Development Centre and ASEAN Secretariat. Disparity both among and within countries needs to be addressed Disparity among and within countries: Cambodia, Lao PDR and Viet Nam Note: Change in Gini coefficient between: 2004 and 2008 for Cambodia; 2002 and 2008 for Lao PDR; 2004 and 2008 for Viet Nam. Sources: OECD Development Centre, ASEAN Secretariat and World Bank World Development Indicators.
CLMV countries have different focuses in different markets CAMBODIA (share of total imports, %) MYANMAR (share of total imports, %) Source: OECD Development Centre s calculation based on UNSO Comtrade. Main messages Growing at 5.5% through 2017, ASEAN economies show resilience, however, they need to narrow development gaps to sustain robust growth. Disparities need to be examined beyond income level differences; and greater efforts are required in poverty reduction and human capital development. Southeast Asian countries need to rethink new growth and development strategies, rely more on domestic demand to adapt to changing international market conditions.