Asia Pacific: Regional Profile

KEY POINTS

ΠGrowth of the Asia Pacific region's real GDP is expected to be 5.6% in 2018, after an increase of 5.7% in 2017.

ΠBeijing's managed deceleration of the economy continues. Growth of real GDP will slow to 6.4% in 2018 after gains of 6.9% in 2017.

ΠBy some measures, India can claim to be the world's fastest-growing major economy. Real GDP will increase by 7.4% in 2018 - after gains of 6.7% in 2017.

ΠJapan's economy is slowing. Real GDP will grow by 1.1% in 2018 after gains of 1.7% in 2017.

Overview of the Regional Economy

Real GDP growth in the Asia Pacific region was 5.4 % in 2016 and 5.7% 2017. Real private final consumption growth was 5.0 in 2017, down from 5.9% in 2016. The region's unemployment rate was 4.4% in 2016 and 4.5% in 2017.

After nearly three decades of uninterrupted growth, the world became accustomed to China serving as one of its major engines for growth. However, growth in real GDP has gradually eased in recent years. The pace picked up in 2017 for the first time in several years. The rebound was driven by driven by property, infrastructure, consumer spending and exports.

India has been the fastest growing of the world's large economies in recent years. Support came from steady gains in consumption, a surge in FDI inflows and the fall in oil prices. The economy has also become more broadly based with both agriculture and industry performing well. The pace of growth slowed only slightly in 2017 owing to the chaotic implementation of a demonetisation policy and the introduction of the Goods and Services Tax. Measured in terms of purchasing power parity, India has become the third-largest economy in the world after China and the US.

The pace of growth in Indonesia slowed somewhat in 2014-2015 due to delays in government spending and weaker exports. Despite this, Indonesia continued to be one of the faster growing of the emerging market economies. A much better performance was turned in 2016 and 2017 when real GDP grew by more than 5% per annum. Support was provided by consumer spending, booming exports and public investment.

Japan's economy was brought to a brutal halt in 2011 after the Great East Japan earthquake and tsunami. Growth resumed in 2012 but the recovery was undermined as a result of a sales tax hike in 2014 which took a huge bite out of consumer spending. Some improvement was recorded in 2015 and 2016 when growth of private consumption finally turned positive, lifted by gains in employment. Exports also picked up. Real GDP accelerated in 2017, growing 1.7%. Support came from a big jump in exports and a fiscal stimulus.

South Korea's economy has grown only modestly in the past several years as external demand in China and other important markets weaken. These adverse external developments had knock-on effects on domestic demand - particularly investment. A supplementary budget and record low interest rates supported the economy in 2016. However, widespread political uncertainty, corporate restructuring and a drop in exports curbed the economy's performance. The economy recovered in 2017 when real GDP grew by 3.1%. The rebound was supported by gains in private final consumption, a rise in investment and a recovery in exports.