Dr. Kirida Bhaopichitr, Senior Economist

1

Global and East Asia

Economic Outlook

The World Bank

11 November 2013

2009 2010 2011 2012 2013e 2014f

World trade Volume (GNFS) -10.6 13.0 6.2 2.7 4.0 5.0

Commodity Prices (USD terms)

Non-oil commodities -24.1 22.5 20.7 -9.5 -4.7 -1.1

Oil Price (USD per barrel) 61.8 79.0 104.0 105.0 100.7 99.6

Real GDP growth

World -2.3 4.0 3.1 2.5 2.3 3.1

High income -3.7 2.9 1.8 1.6 1.3 2.1

OECD Countries -3.7 2.7 1.5 1.2 1.1 1.9

Euro Area -4.2 1.8 1.5 -0.5 -0.6 0.9

Japan -5.5 4.5 -0.5 2.0 1.4 1.4

United States -3.5 3.0 1.8 2.2 2.0 2.8

Non-OECD countries -1.5 7.4 4.9 2.8 3.1 3.7

Developing Countries 2.0 7.5 6.3 4.7 4.8 5.3

East Asia 7.5 9.7 7.1 5.9 7.1 7.2

China 9.2 10.4 9.3 7.8 7.5 7.7

I. Global economy is recovering

albeit slowly

Source: Global Economic Prospects (GEP) June 2013, and East Asia and Pacific Economic Update Oct 2013, The World Bank

E = estimate; f = forecast

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(% year-on-year) As of June & October 2013

I. Risks and volatility remains as

global growth remains low

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• Slow growth in developed

economies/markets and in

China

• Rising interest rates (with

tapering of QE)

• Volatile capital inflows (from

uncertainty due to US debt ceiling

brinksmanship)

• Disorderly unwinding of

investment/lending bubble in

China

-4

-2

0

2

4

6

8

10

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

World High Income countries

Developing countries

GDP growth, in percent year-on-year,

2000-2014

Source: Global Economic Prospects (GEP), June 2013

I. Commodity prices will rise slower than

earlier expected

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Commodity Prices and Price Forecast in Nominal US$

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Coal, Australian $/mt 99.0 121.4 96.4 90.0 91.0 90.0 91.0 91.9 92.9 93.9 94.9

Crude oil, avg, spot $/bbl 79.0 104.0 105.0 100.7 99.6 98.9 98.0 97.2 96.6 96.2 95.8

Natural gas, European $/mmbtu 8.3 10.5 11.5 12.0 11.5 11.0 10.9 10.8 10.7 10.6 10.5

Natural gas, US $/mmbtu 4.4 4.0 208.0 3.8 4.0 4.5 4.7 4.9 5.1 5.4 5.6

LNG, Japanese $/mmbtu 10.8 14.7 16.6 15.5 15.2 15.0 14.7 14.5 14.2 13.9 13.7

Sugar, World ¢/kg 46.9 57.3 47.5 41.0 36.5 38.0 37.7 37.4 37.1 36.8 36.5

Rice, Thai, 5% $/mt 489 543 563 545 520 500 498 496 494 492 490

Rubber, Malaysian ¢/kg 365 482 338 290 305 310 309 308 307 306 305

Aluminum $/mt 2,173 2,401 2,023 1,900 2,100 2,200 2,246 2,292 2,339 2,388 2,437

Copper $/mt 7,535 8,828 7,962 7,100 7,050 7,000 6,980 6,960 6,939 6,919 6,899

Iron ore ¢/dmtu 146 168 128 120 125 130 131 133 134 136 137

Nickel ¢/kg 21,809 22,910 17,548 15,000 18,200 18,500 18,645 18,791 18,938 19,086 19,235

Tin ¢/kg 2,041 2,605 2,113 2,100 2,200 2,300 2,319 2,339 2,358 2,378 2,398

Actual

Commodity Unit

Forecast

II. Risks for East Asian countries

amidst global uncertainties

Slowdown in China

Slower export growth

Slow rise in commodity prices e.g.

rubber

High household debt + rising

interest rate trends may affect

future consumption growth and

banks’ balance sheets

Volatile capital flows affects

exchange rates & capital markets

5

70

80

90

100

110

120

130

ม.ค.-07 ก.พ.-08

ม.ีค.-09 เม.ย.-10

พ.ค.-11

ม.ิย.-12 ก.ค.-13

Indonesia Thailand Malaysia

Real effective exchange rate index,

September 2008 = 100 (Increase = appreciation)

II. Opportunities for East Asia

in the medium-term

East Asia will remain the fastest growing region in the world

Greater regional integration and openness (AEC & FTAs)

Greater investments/capital flows into East Asia (incl. from Japan’s Abenomics)

A bigger middle-income class, especially in China – higher purchasing power

6

FDI Inflows to EAP

0

50

100

150

200

250

300

350

400

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012

Billion U

SD

Billion U

SD

Korea Thailand Indonesia

China (RHS) Singapore (RHS) Total (RHS)

Source: World Development Indicators

II. E. Asia’s domestic challenges:

High household debt & corporate debt7

0 50 100 150 200 250

Malaysia

China

Thailand

Philippines

Indonesia

General government Nonfinancial corporations

Households Financial Institutions

Source: East Asia and Pacific Update (EAP), October 2013

Debt, by debtor, in percent of GDP, end-2012

0

10

20

30

40

50

60

1985 2009 1984 2005 1992 2008 1981 2007 1994 2008 1993 2008 1990 2010 1984 2010

Philippines Indonesia Lao China Cambodia Vietnam Thailand Malaysia

Increasing inequality Constant inequality Decreasing inequality

III. East Asia’s domestic challenges: Income

inequality is high and rising in some countries

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Changes in Gini coefficients (Income)

Source: World Bank, World Development Indicators

In Thailand, the Northeast lags in many

dimensions of inequality9

Human Opportunities and

Development Index by UNDP 2009

Northeast ---------

North _________

South …………….……

Central -- -- -- --

Bangkok __ __ __ __

O-Net scores are lowest in the

Northeast

Source: Office of Basic Education, in Parandekar

(2011)

Source: UNDP Thailand Human Development Report (2009)

III. East Asia will need a new engine of

growth that is also “inclusive”

$-

$5,000

$10,000

$15,000

$20,000

$25,000

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78

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Gro

ss N

atio

nal

In

com

e p

er

cap

ita

(20

00

co

nst

ant

USD

)

GNI per capita (2000 constant USD)

China

Korea, Rep.

Malaysia

Taiwan, China

Thailand

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Countries in E. Asia needs to accelerate growth to escape the “Middle Income Trap”

Source: World Development Indicators

III. Firms report that English, ICT, and soft

skills are lacking in many E. Asian countries

11Source: World Bank, Investment Climate Assessments

III. Thailand is in the bottom ranks in English

proficiency among adults12

Note: Out of 60 countries in which English is not a native or national language; Source: EF Education First (2013)

III. Mixed results in E. Asia in moving

towards a knowledge economy

1 0 Sweden

13 3 Taiwan, China

22 - 5 Japan

23 - 3 Singapore

29 - 5 Korea, Rep.

48 - 3 Malaysia

60 - 1 Brazil

66 - 6 Thailand

84 7 China

104 9 Vietnam

World Bank’s Knowledge Economy Index 2012*

* KEI is a simple average of 4 sub-indexes which represents the 4 pillars of the knowledge economy:

(1) economic incentive and institutional regime, (2) education and training, (3) innovation and technological

adoption, and (4) information and communications technologies (ICT) infrastructure.

Ranking

2012

Change

from 2000

13

THANK YOU

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