Asian Development Outlook 2012 Highlights

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ASIAN DEVELOPMENT

Outlook2012

HIGHLIGHTS


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Developing Asia will largely maintain its growth momentum in the

next couple o years despite weak global demand. From a moderate

7.2% in 2011, growth in the region will ease to 6.9% in 2012 beore

picking up to 7.3% in 2013.

Ination or most regional economies subsided in the second hal o

2011 as international commodity price rises slackened, but threats ooil supply disruptions risk urther price spikes. Volatile oreign capital

ows remain a concern as investors shit their risk perceptions in

response to the changing global environment.

The greatest risk to the outlook is uncertainty surrounding the

resolution o sovereign debt problems in the eurozone. But in the

absence o any sudden shocks, developing Asia can manage the eectson its fnancial markets and trade ows. There is no clear case or

policy makers in the region to pursue short-term fscal or monetary

stimulus measures.

Developing Asia has made great strides in raising living standards

and reducing poverty, but swelling income disparities threaten to

undermine that success. Regional policy makers need to ensure thatthe benefts o growth are widely shared.

ADO 2012Highlights


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2 Asian Development Outlook 2012

Key messagesDespite the weak global environment, developing Asias growth

momentum continues. The regions gross domestic product (GDP)growth will cool somewhat to 6.9% in 2012, rom 7.2% in 2011, and thenedge back up to 7.3% in 2013. The region is generally adjusting towarda more sustainable long-run growth path.

Strong domestic demand provided necessary support in 2011, andthis will need to continue in light o the sot export demand expectedrom the major industrial economies o the United States (US),

eurozone, and Japan. Collectively, they are expected to expand by only1.1% in 2012 and 1.7% in 2013.

The greatest risk to the outlook is the continued uncertainty overresolving the sovereign debt problems in the eurozone. The orderlydeault on Greeces debt in March 2012 diminished the risk o aliquidity crunch in the short run, but calls or scal austerity across theeurozone will act as a drag on growth.

The eects on developing Asias nancial stability and trade ows canbe managed i there are no uture shocks, but policy makers needto be ready to respond i the eurozone situation worsens. Globalvalue chainsthe cross-border production networks o developingAsiaand sudden reductions in trade nance tend to magniyexternal shocks.

Even i a major external risk to the orecasts materializes, developing

Asia has some scope or a macroeconomic policy response. Althoughthe policy stimulus that it adopted in response to the global economiccrisis has used up some o its policy space, the region has sinceregained some o that space. Budget decits have come down, policyinterest rates have been raised, and regional and global saety nets orliquidity support have been strengthened.

In the absence o urther global shocks, there is no clear case or

developing Asia to make short-term countercyclical macroeconomicpolicy responses. The gap between potential production and the


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Highlights 3

actual level o output in most developing Asian economiesunlikethe advanced economiesis not large enough to warrant aggressive

stimulus measures. Instead, policy makers may need to ocus onmaintaining price stability while sustaining the growth momentum.

Ination is not an immediate threat or most regional economiesdecelerating international commodity price rises rom late 2011 haveeased some o the pressures. Consumer prices in developing Asia areorecast to rise by 4.6% in 2012 and 4.4% in 2013, down rom 5.9% in 2011.However, the unstable geopolitical situation in the Middle East could

trigger urther oil price spikes, reviving ination in developing Asia.

Many economies had been normalizing their accommodativemonetary policy in early 2011, but they stopped or even reversed theprocess in the second hal, as uncertainties in the major industrialcountries damped global demand, and as pressures rom internationalcommodity price rises eased. I inationary pressures build again andcapital inows resume, there may be a need to readjust monetarypolicy to maintain price stability.

Volatile capital ows remain a concern. Widely shiting risk perceptionsamong oreign investors in 2011 aected capital ows to developingAsia as unds owed out toward risk-ree assets. I changing investorsentiment causes large swings in capital ows againbuilding upinationary pressures or making exchange rates more volatilepolicymakers have various measures o capital ow management attheir disposal, but such measures need regional coordination to be

eective. Greater exchange rate exibility may also damp speculativecapital movements.

Fiscal policy must balance the pursuit o long-term macroeconomicstability and support or growth. Debt-to-GDP ratios spiked in theregion ater the massive scal responses to the global crisis, but theyare now trending downward, although lower growth or higher interestrates could quickly undermine this position. Moreover, the region aces

additional sources o scal strain in the years ahead, such as adjustingto aging populations and building adequate social saety nets.


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Developing Asias economies need to push through growth-supportiveexpenditure policies without undermining their scal positions. They

can do this by adjusting the composition o government expendituretoward education, health, and social saety nets and by expandingexpenditure alongside revenue enhancements. Such shits in scalpolicy will be increasingly important as the region conronts risingincome inequality while ostering continued economic expansion.

In the last two decades, income disparities widened in the11 economies that account or more than our-ths o the regions

population. Rising inequality can damp the poverty impact oeconomic growth, and even undermine the basis o growth itsel.

The orces o technological progress, globalization, and market-oriented reormthe primary drivers o the regions rapid growthare putting a wedge between the incomes o the rich and poor. Theseactors tend to avor owners o capital over labor, high-skilled overlow-skilled workers, and urban and coastal centers over rural andinland areas.

Policy makers must meet the challenge o rising inequality withouthindering uture growth. They can do this through policies that put inplace efcient scal measures, that promote regional balance, and thatmake growth more employment riendly.


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Maintaining growth in an uncertain world

Developing Asias outlookDeveloping Asias growth is eeling the eects o weak globaldemand. Expansion in the regions GDP moderated to 7.2% in 2011 rom2010s postglobal crisis rebound o 9.1%. Growth in developing Asia isexpected to ease urther to 6.9% in 2012 beore coming back to 7.3% in2013. These growth projections are still strong compared with other regionso the world, and are part o the adjustment toward a more sustainablelong-run growth path in the more advanced regional economies.

Developing Asias main trading partners have yet to return to theirprecrisis growth rates. Growth in the major industrial countries othe US, eurozone, and Japan was subdued in 2011, with GDP growingcollectively by a disappointing 1.2%. Their prospects are also uninspiring,with growth set to stall at 1.1% in 2012 beore gaining some lit to 1.7%in 2013. Fiscal consolidation eorts and insipid private domestic demandgrowth will stay a drag on these economies, and the slipstream romthe eurozones sovereign debt crisis is bueting that bloc back intorecession. Developing Asia should expect relatively weak demand or itsexports rom these three economies in the near term.

That is why domestic demand, which is providing increasingsupport or the regions producers, is welcome. Privateconsumption continues to be a major actor in the regions growth. Yetinvestment weakened appreciably toward end-2011, weighing on theoutlook or the coming quarters, particularly or export-led economies

such as the Peoples Republic o China (PRC); Hong Kong, China; theRepublic o Korea; Malaysia; and Taipei,China.

The shit toward domestic demand is apparent in urther declinesin developing Asias current account surplus. The surplus continuedto narrow to 2.6% o GDP in 2011 rom 4.0% in 2010, reecting moderatingdemand or exports, solid domestic demand pushing imports upward,and higher prices or imported oil and commodities. Steady, real

exchange rate appreciation in many regional economies has supportedthis shit. The current account surplus is orecast to be trimmed urther in2012 to 1.9% o GDP, given continued growth in import demand in mosteconomies while exports ace sot global demand.


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Ination is set to recede, but volatile commodity prices are apotential threat. Higher ood and uel prices drove up ination in

developing Asia to 5.9% in 2011 rom 4.4% in 2010. With relativelystable (but elevated) oil prices, some respite oered by easing oodprices, and lower demand or the regions exports, ination in theregion is orecast to slow to 4.6% in 2012 and 4.4% in 2013. However,continued instability in the Middle East, including threats o oil supplydisruptions, could lead to another round o temporary price spikes, inturn anning the embers o ination in developing Asia.

Volatile capital ows remain a concern.

Net capital inows todeveloping Asia increased rom the second hal o 2010 and into therst hal o 2011. The PRC was the main beneciary o the inux, muchin the orm o oreign direct investment. At the onset o the eurozoneturmoil and the ratings downgrade o US long-term sovereign creditin the second hal o 2011, global investors sharply curtailed theirrisk appetite. Consequently, regional capital inows slowed, evenswitching to outows or some countries. Major industrial countriesare likely to maintain accommodative monetary policies over theorecast period, and so policy makers in developing Asia will needto be prepared or potentially large swings in capital ows based onuctuations in global investors risk appetites.

Eurozone uncertainties and developing Asia

Continued uncertainties in the eurozone present the greatestrisk to the global outlook. Despite recent progress easing the

eurozones sovereign debt problems somewhat, the weaker growthmomentum in Europe poses risks. The voluntary private sectorparticipation agreement reached in March 2012 helped restructureGreeces government debt, thus removing the immediate risk o adisorderly deault that could have sparked a global liquidity crisis.As the nature o the primary risk to developing Asia has shited romnancial contagion to slower export growth, developing Asias policymakers need to prepare or the possibility o an extended period o

low European demand or exports.


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In the absence o any sudden shocks, the eects on developingAsias nancial stability and trade ows can be managed. The

regions direct exposure to eurozone banks is relatively small, andreserves are sufcient to cover short-term external debt repayments,helping shield the region rom nancial contagion. The region is morevulnerable to the risk o a trade shock, the main channel throughwhich Asia was aected by the global nancial crisis. Europe is a keyexport market or Asia, and will remain so in the near uture despiteits declining share in recent years. But as long as the slowdown isconned to the eurozoneas opposed to a synchronized advanced-

country recessiondeveloping Asia should be able to absorb theimpact o lower export demand.

I the situation in the eurozone worsens to the extent oundermining global recovery, developing Asias policy makersneed to be prepared to act quickly. Recent history shows that twoareas in particularglobal value chains and trade nanceinteractwith an external trade shock to intensiy its impact.

Global value chainsthe production model behind East andSoutheast Asias export successampliy external shocks. The20082009 global trade collapse highlighted this vulnerability, asexternal demand or nal goods dried up and the impact rippledthrough the regions supply chains. Asias export productionstructure and demand sources have changed little since then,and a steep drop in nal goods demand rom the major industrialcountries would still strongly compress aggregate demand or

exports throughout the region. This vulnerability underscores theneed to diversiy the destinations or the regions nal goods andto accelerate the shit to more reliance on domestic demand.

Trade nance shortages exacerbate the impact o an exportdemand shock that is accompanied by a credit squeeze. Tradenance is generally short term and low risk, and in noncrisisperiods mainly takes the orm o credits between rms. But duringa severe crisis, these interrm credits may dry up, raising rms

need or bank lending. However, the deleveraging o Europeanbanks, which are traditionally active in supporting trade in Asia,


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could cut into the supply o trade nance. In addition, Basel IIIregulations could skew bank incentives away rom trade nance.

Policy makers may need to pay special attention to trade nancewhen credit is squeezed, especially or small and medium-sizedenterprises.

Responding to the unsettled global environment

Developing Asia has some scope or a macroeconomic policyresponse i a major downside risk to the outlook materializes.

The stimulus measures adopted in response to the global crisis werea departure rom the prudent scal and monetary policy that regionalauthorities had generally pursued. Budget decits, though not backto precrisis levels, have narrowed and policy interest rates have beenraised, providing room or a new policy response i needed. Further,regional and global saety nets or liquidity support have beenstrengthened.

However, there is no clear case or a short-term countercyclicalpolicy response to the current global economic environment.Although the slowdown in Europe is putting a brake on the regionsgrowth, the impact is manageable. Output gaps o most Asianeconomies, unlike the advanced economies, are not large enough towarrant aggressive countercyclical support.

The region can ne-tune monetary policy to support growth whilekeeping a ocus on stabilizing inationary expectations. In the

ace o inationary pressures, the relatively accommodative monetarypolicy that began in late 2008 was tightened until mid-2011. However,in the second hal o the year, many countries stoppedand in somecases reversedthe course o monetary tightening as uncertainties inthe major industrial countries damped global demand and pressuresrom international commodity price rises eased. I inationarypressures build again and capital inows resume, there may be a needto readjust monetary policy to maintain price stability.


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Foreign capital ows will need to be managed to mitigate theimpact o their uctuations. Investors assessments o global market

risks swung widely ater the onset o the global crisis in 2008, andthe continued global economic uncertainty suggests that movesmay be similarly volatile in the orecast period. I large swings ocapital ows to the region reoccur, various measures o capital owmanagement may be deployed, but they require regional coordinationto be eective. Greater exchange rate exibility may also help deterspeculative capital ows.

Fiscal policy must balance the pursuit o long-term

macroeconomic stability with support to growth momentum.Debt-to-GDP ratios in the region spiked due to the scal responseto the global crisis, but they are now generally on a downwardpath. However, governments have no room or complacency, sincesustained alling debt ratios depend on continued avorable growthand interest rates, which are subject to sudden reversal in the case oa renewed global economic downturn or a nancial crisis. Moreover, theregion aces additional sources o scal strain in the years ahead, such asadjusting to aging populations and building adequate social saety nets.

Growth-supportive expenditure policies can be achieved withoutundermining scal positions. This can be done with budget-neutral measures that shit the composition o government spendingto education, health, and social saety nets, and by expandingexpenditure alongside revenue enhancements. Such shits in scalpolicy will be increasingly important as the region conronts rising

income inequality while ostering continued economic expansionanissue analyzed in the theme chapter oAsian Development Outlook 2012.


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Outlook by subregionGlobal actors have given way to country-specic issues in

developing Asias outlook. In the atermath o the collapseo Lehman Brothers in the third quarter o 2008, most regionaleconomies were aected by the sharp drop in global demand andsubsequent recovery. But as the global environment has become lessvolatilealthough growth is still slower than beore the global crisiscountry- or subregion-specic shocks are playing a bigger role, leadingto wider variation among economic trends at those levels. Factorsinclude natural disasters, the availability o resources, and the strength

o domestic demand.

East Asias growth will moderate to 7.4% in 2012 but will still leadthe other subregions. Growth has decelerated markedly since the9.8% rebound in 2010, dropping to 8.0% in 2011 as the deterioratingglobal outlook in the second hal o 2011 aected directly thecontribution to growth o net exports and indirectly investment andconsumption. An uptick to 7.7% is orecast or 2013. Growth or the PRCis orecast to moderate to 8.5% and 8.7% in the next 2 years (thoughthis still exceeds the growth envisaged in the 12th Five-Year Plan).East Asias ination is orecast to slow to 3.7% in the next 2 years. Theexception is Mongolia, where double-digit rates will prevail as surginggovernment spending boosts domestic demand.

South Asia will see growth improve a shade in 2012 to 6.6%.Growth in 2011 ell sharply to 6.4%, mainly reecting Indias markedmonetary tightening in the ace o persistent ination and slumping

investment. Growth in Pakistan declined because o disastrousooding, although Bangladesh and Sri Lanka did well on brisk exports.The pace o Indias growth is projected to edge up to 7.0% in 2012and 7.5% in 2013, providing most o the lit or subregional growth toreach 7.1% in 2013. Pakistans growth will advance only slightly in bothyears because electricity will remain a bottleneck on the supply side.South Asias ination is expected to all rom 9.4% last year to 7.7% in2012 and urther to 6.9% in 2013. Some cutbacks in the heavy uel and

electricity subsidies in most countries are expected, and will set a oorto how ar ination can all.


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Growth in Southeast Asia or 2012 is seen picking up to 5.2%. Overall GDP growth decelerated to 4.6% in 2011, as Southeast Asia

was hard hit by weakened export markets, domestic policy tightening,and natural disasters that disrupted trade and productiononlypartly redeemed by strong growth in the subregions largest economy,Indonesia. The pickup in growth in 2012 largely reects recovery inThailand rom major ooding as its growth rate rebounds rom 0.1% in2011 to 5.5% in 2012. Subregional growth is orecast to climb to 5.7% in2013. Indonesia will continue its solid growth perormance, expandingby 6.4% in 2012 and 6.7% in 2013. Higher ood and uel prices drove

up aggregate ination to 5.5% in 2011, but assumed relatively steadyglobal oil prices and easing ood prices in 2012 seem likely to slowination to 4.4% over the next 2 years.

Central Asia should just about keep up the momentum at 6.1% in2012 and 6.2% in 2013. This years outturn reects the combination oa weak eurozone and slower growth in the Russian Federation, osetby a bounceback in growth in Azerbaijan. In 2011, strong demandor petroleum boosted growth in Kazakhstan and Turkmenistan, butAzerbaijans minimal growth, due to temporary closure o some oilproduction acilities, dragged down the subregional rate. Inationaccelerated in 2011 to 9.0%, mainly on rapid increases in world uel andood prices. More moderate ood price ination and expected stable oilprices are seen helping slow ination to 7.2% in 2012 and 7.3% in 2013.

The Pacic economies are relatively insulated rom developmentsin the eurozone. Robust expansion in the resource-exporting

economies o Papua New Guinea (which accounts or roughly 60% oPacic GDP), Timor-Leste, and Solomon Islands, and strong growth inthe tourism-oriented economies o the Cook Islands, Fiji, Palau, andVanuatu, lited subregional growth to 7.0% in 2011making this theonly subregion to post aster growth in 2011 than 2010. Yet the Pacicis orecast to slow to 6.0% and 4.1% over the next 2 years due to lowerresource export revenue, the winding down o inrastructure projects thatstimulated growth in 2011 (Papua New Guinea, the Marshall Islands, and

Vanuatu), lower international agricultural prices, and ooding impacts(Fiji). Ination is expected to all to 6.6% in 2012 rom 8.6% in 2011.


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Special theme: Confronting rising inequality in Asia

Asias rising inequalityDeveloping Asias impressive growth continues, but is paced by anew challengeinequality on the rise. Over the last ew decades,the region has lited people out o poverty at an unprecedented rate.But more recent experience contrasts with the growth with equitystory that characterized the transormation o the newly industrializedeconomies in the 1960s and 1970s. In the 11 economies that accountor more than our-ths o the regions population, income disparities

expanded during the last two decadesdespite the regions world-beating perormance in raising average incomes and reducing poverty.

Inequality widened in 11 o the 25 economies with comparabledata, including the three most populous countries and drivers othe regions rapid growththe PRC, India, and Indonesia. Fromthe early 1990s to the late 2000s, the Gini coefcienta commonmeasure o inequalityworsened rom 32 to 43 in the PRC,rom 33 to 37 in India, and rom 29 to 39 in Indonesia. Treatingdeveloping Asia as a single unit, its Gini coefcient went rom39 to 46 in that period.

Although Asias inequality levels are generally below those inother developing regionsthe average Gini coefcient acrossdeveloping Asian economies was 38 compared with an average o52 or Latin American economiesincomes are becoming moreequitable elsewhere.

Inequality o opportunity is also prevalent in developing Asia. Disparities in the means to raise ones living standardssuch asphysical assets (e.g., capital and land), human capital (e.g., educationand health), and market access (e.g., labor and nance)are common.Unequal access to public services, especially education and health, iscentral to generating inequality o opportunity. National householdsurveys conducted in the mid- to late 2000s revealed many acets odiverging opportunities:


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School-age children rom households in the poorest incomequintile were three to ve times as likely to be out o primary and

secondary school as their peers in the richest quintile in somecountries. The situation was even more dire or tertiary educationwhere poorer college-age individuals were 1020 times more likelynot to attend college than their better-o peers.

Inant mortality rates among the poorest households in somecountries were double or treble the rates among the richesthouseholds. In the most extreme examples, the chance o a poorinant dying at birth was more than 10 times higher than or an

inant born to a rich amily.With ew exceptions, the regions economies have made signicantprogress toward gender parity in primary and secondaryeducation. Yet high gender disparities in tertiary education remainin South Asia and the Pacic.

Inequality o opportunity is a crucial actor in widening incomeinequality in developing Asia. Moreover, these two orms oinequality can lead to a vicious circle as unequal opportunitiescreate income disparities, which in turn lead to dierences in utureopportunities or individuals and households.

Why inequality matters

Rising inequality can damp the poverty impact o economicgrowth. I inequality had remained stable in the Asian economieswhere it increased, the same growth in 19902010 would have taken

about 240 million more people out o povertyequivalent to 6.5% odeveloping Asias population in 2010 and 8.0% o those countries withrising inequality.

Inequality can weaken the basis o growth itsel. High and risinginequality can curb medium-term growth by reducing social cohesion,undermining the quality o governance, and increasing pressure orinefcient populist policies.


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Asian policy makers are becoming more concerned aboutinequality. In an inormal, web-based survey o Asian policy makers in

JanuaryFebruary 2012, over 65% o respondents agreed that incomeinequality in their countries was high or very high. Almost all elt thatincomes in their countries were becoming more unequal. Moreover,a majority believed that success in reducing poverty was insufcientto justiy widening inequality. This concern is increasingly beingaddressed through development plans across the region, as theyinclude explicit goals to make growth more inclusive.

Drivers of inequality

Technological progress, globalization, and market-orientedreormthe primary drivers o the regions growthare the keyorces behind the rise in inequality. These orces combined haveopened new opportunities or economies to prosper, but have notbeneted all people equally. Together, these drivers explain not onlythe increase in overall inequality, but also the sharply rising incomes othe very rich in some countries.

These orces aect income dierences through three channels:capital, skill, and spatial bias. The bias toward physical capitalreduces labors share o national income while increasing the incomeshare o the owners o capital. Similarly, the heightened demandor better skilled workers raises the premium on their earnings. Andspatial disparities are becoming more acute: locations with superiorinrastructure, market access, and scale economiessuch as urban

centers and coastal areasare better able to benet rom changingcircumstances.

Labors share o total income is alling in many economies in theregion. Between the mid-1990s and the mid-2000s, labor income asa share o manuacturing output in the ormal sector ell rom 48%to 42% in the PRC and rom 37% to 22% in India. The employmentintensity o growth in Asia is lower than the global average and has

declined in recent decades.


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Dierences in educational attainment can explain 25%35% oinequality between households in many regional economies,

and the earnings premium or skills and tertiary education hasincreased in recent years.

The combined contribution o ruralurban and interprovincialdierences to total inequality ranges rom 13% in Sri Lanka to54% in the PRC. The gaps between urban and rural incomes indeveloping Asia have increased, as have those between prosperousand lagging areas.

Policy priorities for confronting rising inequality

Because the orces behind rising inequality are also the engineso productivity and income growth, policy makers should nothinder their progress. A distinction needs to be made between theincome dierences that arise as economies take advantage o thenew opportunities o technology, trade, and efciency-enhancingreorms; and those that are generated by unequal access to marketopportunities and public services. This latter source o inequalityrequires a policy response since it gets magnied by the orces, leadsto inefciency, and undermines the sustainability o growth.

Governments can address rising inequalities through several policychannels, three o which are highlighted in the theme chapter:

Efcient scal policies. These include:spending more on education and health, especially or poorerhouseholds;developing and spending more on better targeted socialprotection schemes, including conditional cash transers thattarget income to the poorest but also incentivize the buildupo human capital;reducing or eliminating general price subsidies (such as onuel) and compensating the impact on the poor by targetedtransers; and

broadening the tax base and strengthening tax administrationor greater and more equitable revenue mobilization.


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Interventions to improve regional balance. These include: improving transport and communications networks between

developed and poor regions;creating growth poles in lagging areas;using scal transers to poorer areas in order to accelerateinvestment in human capital and improve access to publicservices there; andremoving barriers to within-country migration.

Policies to make growth more employment riendly. These include:encouraging structural transormation to create a greater

number o productive jobs, and maintaining a balancedsectoral composition o growth between manuacturing,services, and agriculture;supporting development o small and medium-sizedenterprises;removing actor market distortions that avor capital over labor;establishing or strengthening labor market institutions; andintroducing public employment schemes as a temporary

bridge to address pockets o unemployment andunderemployment.

Developing Asia must turn back the tide o rising inequality.The region has enjoyed a remarkable period o growth and povertyreduction, but the new global realities o technological progress,more globally integrated markets, and greater market orientationare magniying the eects o inequalities in physical and humancapital. Asian policy makers need to redouble their eorts to equalize

opportunities in employment, education, and health to make growthmore inclusive. Without such policies o job creation and efcientredistribution to enhance growth, Asia may be pulled into inefcientpopulist policies, which would help neither growth nor equity.


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Table 1 Growth rate of GDP (% per year)

Subregion/Economy 2009 2010 2011 2012 2013

Central Asia 3.2 6.6 6.2 6.1 6.2

Azerbaijan 9.3 5.0 0.1 4.1 3.5

Kazakhstan 1.2 7.0 7.5 6.0 6.5

East Asia 6.7 9.8 8.0 7.4 7.7

China, Peoples Rep. of 9.2 10.4 9.2 8.5 8.7

Hong Kong, China -2.6 7.0 5.0 3.0 4.5

Korea, Rep. of 0.3 6.2 3.6 3.4 4.0

Taipei,China -1.8 10.7 4.0 3.4 4.6

South Asia 7.5 7.8 6.4 6.6 7.1

Bangladesh 5.7 6.1 6.7 6.2 6.0

India 8.4 8.4 6.9 7.0 7.5

Pakistan 1.7 3.8 2.4 3.6 4.0

Sri Lanka 3.5 8.0 8.3 7.0 8.0

Southeast Asia 1.4 7.9 4.6 5.2 5.7

Indonesia 4.6 6.2 6.5 6.4 6.7

Malaysia -1.6 7.2 5.1 4.0 5.0

Philippines 1.1 7.6 3.7 4.8 5.0

Singapore -1.0 14.8 4.9 2.8 4.5Thailand -2.3 7.8 0.1 5.5 5.5

Viet Nam 5.3 6.8 5.9 5.7 6.2

The Pacific 4.2 5.5 7.0 6.0 4.1

Fiji -1.3 -0.2 2.1 1.0 1.2

Papua New Guinea 6.0 7.4 8.9 7.5 4.5

Developing Asia 6.0 9.1 7.2 6.9 7.3

Notes: Developing Asiarefers to 44 developing member countries of the Asian Development Bank

and Brunei Darussalam, an unclassified regional member; East Asia comprises the Peoples Republic

of China; Hong Kong, China; the Republic of Korea; Mongolia; and Taipei,China;Southeast Asia

comprises Brunei Darussalam, Cambodia, Indonesia, the Lao Peoples Democratic Republic, Malaysia,

Myanmar, the Philippines, Singapore, Thailand, and Viet Nam; South Asiacomprises Islamic Republic

of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka;

(continued on the next page)


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Table 2 Inflation (% per year)

Subregion/Economy 2009 2010 2011 2012 2013

Central Asia 5.9 7.0 9.0 7.2 7.3

Azerbaijan 1.5 5.7 7.9 9.0 8.5

Kazakhstan 7.3 7.1 8.3 6.5 6.8

East Asia -0.1 3.1 5.0 3.7 3.7

China, Peoples Rep. of -0.7 3.3 5.4 4.0 4.0

Hong Kong, China 0.6 2.3 5.3 3.8 3.3

Korea, Rep. of 2.8 3.0 4.0 3.0 3.0

Taipei,China -0.9 1.0 1.4 1.5 1.6

South Asia 5.2 9.4 9.4 7.7 6.9

Bangladesh 6.7 7.3 8.8 11.0 8.5

India 3.8 9.6 9.0 7.0 6.5

Pakistan 17.0 10.1 13.7 12.0 10.0

Sri Lanka 3.5 6.2 6.7 8.0 7.0

Southeast Asia 2.7 4.1 5.5 4.4 4.4

Indonesia 4.8 5.1 5.4 5.5 5.0

Malaysia 0.6 1.7 3.2 2.4 2.8

Philippines 4.2 3.8 4.8 3.7 4.1

Singapore 0.6 2.8 5.2 3.0 2.5Thailand -0.9 3.3 3.8 3.4 3.3

Viet Nam 6.9 9.2 18.6 9.5 11.5

The Pacific 5.3 5.5 8.6 6.6 5.4

Fiji 3.7 7.8 8.7 5.1 3.0

Papua New Guinea 6.9 6.0 8.7 7.0 6.0

Developing Asia 1.4 4.4 5.9 4.6 4.4

(continued from the previous page)

Central Asia comprises Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan,

Turkmenistan, and Uzbekistan; andThe Pacific comprises the Cook Islands, Fiji, Kiribati, Republic

of the Marshall Islands, the Federated States of Micronesia, Nauru, Papua New Guinea, Republic of

Palau, Samoa, Solomon Islands, Democratic Republic of Timor-Leste, Tonga, Tuvalu, and Vanuatu.

Data for Bangladesh, India, and Pakistan are recorded on a fiscal-year basis. For India, the fiscal year

spans the current years April through the next years March. For Bangladesh and Pakistan, the fiscal

year spans the previous years July through the current years June.

Documents

Asian Development Outlook 2012 Highlights