i m a g i n e . . . h o w w i l l A s i a shape politics, business and society to 2030
The East Asia and the Pacific region led the rebound in the global economy last year, reflecting robust fiscal policy steps and strong domestic demand. China, with 8.4 percent growth last year, was an engine for regional growth, a pattern expected to continue this year, with Chinese GDP projected to grow 9 percent. GDP in the region is estimated to have increased 6.8 percent in 2009 and is forecast to edge up 8.1 percent this year. Capital flows to the region are returning and local financial market developments have provided further impetus to the recovery. Continuing excess capacity in manufacturing and only moderate advances in world trade growth will restrain GDP growth from accelerating much faster than 8.2 percent in 2011.
Reflecting pre-existing vulnerabilities in many countries (in particular current account deficits arising from large private sector savings-investment imbalances), developing Europe and Central Asia was hardest hit by the crisis, with GDP falling by an estimated 6.2 percent in 2009. Although GDP is projected to rise by 2.7 percent in 2010 and 3.6 percent in 2011, growth rates in most economies will remain below potential and unemployment and bank restructuring will continue to be pervasive. Much higher non-performing loans, higher interest rates and weak international capital flows will remain key challenges in the near term. Compared to the pre-crisis period, high non-performing loans, weak public finances and low international capital flows are likely to dampen investment growth in many countries. Moreover, significant downside risks persist, including the possibility of a double-dip recession or increased financial difficulties for banks in the region. Despite better international financing conditions and domestic adjustments, the region’s external financing needs are expected to exceed inflows by as much as $54 billion in 2010.