Thailand, World Bank, Growth
- July 11, 2012
The World Bank has once again released it East Asia and Pacific Economic Update, May 2012—Capturing New Sources of Growth.
The report offers a somewhat optimistic picture for the region, while recognizing the challenges and risks that continue to be posed by the overall external environment, notably in Europe.
The East Asia Pacific Region today has the strongest growth of any other region, as shown in World Bank Figure 2 below. While developing East Asia grew by 8.2 percent in 2011, it was nevertheless a drop from growth of nearly 10 percent in 2010, although this is explained in part due to the supply disruptions caused by the earthquake and Tsunami in Japan and flooding in Thailand, Laos, and Cambodia.
Despite the weaker demand coming from the United States and Europe, as these regions continue a slow recovery from the global financial crisis, the East Asia and Pacific region managed strong growth in 2011 as domestic demand, supported by easing of monetary policies, took up the slack. World Bank Figure 10 clearly shows the declining emphasis on exports. The report does note, however, that the EU, US and Japan account for more than 40 percent of the region’s exports and that European banks provide one third of trade and project finance in Asia. “Most East Asian economies are well positioned to weather renewed volatility. Domestic demand has proved resilient to shocks. Many countries run current account surpluses and hold high levels of international reserves. Banking systems are generally well- capitalized,” said Bert Hofman, World Bank Chief Economist for the East Asia and Pacific Region
And at the same time that domestic demand has been increasing there is a notable decrease in the region’s poverty levels. “The number of people living on less than US$2 a day is expected to decrease in 2012 by 24 million. Overall the number of people living in poverty has been cut in half in the last decade in East Asia and Pacific,” said Pamela Cox, World Bank East Asia and Pacific Regional Vice President.
This increased domestic demand is something that the Bank sees as the best prospect for maintaining high growth, job creation and poverty reduction, along with investment in productivity increases and continued international integration.
This outlook bodes well for Thailand which not only has a vibrant domestic market, but is also moving away from economic growth that is based on the attraction of low wage employment towards increased productivity through technology and increased value-added products from the creativity and knowledge of the workforce. All of this should put ASEAN’s second largest economy in a good position when the ASEAN Economic Community emerges in 2015…
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