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世界银行:2024年东亚与太平洋地区经济半年报(4月期)(英文版)(118页).pdf

1、FIRM FOUNDATIONS OF GROWTHWORLD BANK EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024 WORLD BANK EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024Firm Foundations of Growth EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024 2024 International Bank for Reconstruction and Development/The Worl

2、d Bank1818 H Street NW,Washington,DC 20433Telephone:202-473-1000;Internet:www.worldbank.orgSome rights reserved1 2 3 4 27 26 25 24This work is a product of the staff of The World Bank with external contributions.The findings,interpretations,and conclusions expressed in this work do not necessarily r

3、eflect the views of The World Bank,its Board of Executive Directors,or the governments they represent.The World Bank does not guarantee the accuracy,completeness,or currency of the data included in this work and does not assume responsibility for any errors,omissions,or discrepancies in the informat

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7、cense,you are free to copy,distribute,transmit,and adapt this work,including for commercial purposes,under the following conditions:AttributionPlease cite the work as follows:World Bank.2024.Firm Foundations of Growth World Bank East Asia and Pacific Economic Update(April 2024).Washington,DC:World B

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12、ssion is needed for that re-use and to obtain permission from the copyright owner.Examples of components can include,but are not limited to,tables,figures,or images.All queries on rights and licenses should be addressed to World Bank Publications,The World Bank,1818 H Street NW,Washington,DC 20433,U

13、SA;e-mail:pubrightsworldbank.org.ISBN(electronic):978-1-4648-2102-8DOI:10.1596/978-1-4648-2102-8Cover photo:A female businesswoman leading a meeting with multi ethnicity team members by Koh Sze Kiat Getty Images.Used with the permission of Getty Images.Further permission required for reuse.FIRM FOUN

14、DATIONS OF GROWTHiiiLIST OF CONTENTSContentsPreface and Acknowledgments xiList of Abbreviations xiiiOverview xvAbstract xvii1.Recent Developments 12.Determinants 73.Outlook and Risks 274.Policies 355.Special Focus:Firm Foundations of Growth 47References 77EAST ASIA AND THE PACIFIC ECONOMIC UPDATE AP

15、RIL 2024ivLIST OF CONTENTSList of FiguresOverviewFigure O1.The EAP region is growing faster than the rest of the world but slower than before the pandemic in most major economies;output per capita is still below pre-pandemic levels in most Pacific Island countries and declined further in some xviiFi

16、gure O2.A combination of external and domestic factors is influencing economic growth in the EAP region xviiiFigure O3.Three linked international developments will shape economic performance in the EAP countries:slowing global economy,financial tightness and trade-distorting measures xixFigure O4.Th

17、e rich and large countries,i.e.the G20,are the prime practitioners of industrial policy xixFigure O5.Private and public debt is higher than before the pandemic;public debt as a share of GDP is likely to increase due to higher primary deficits,higher interest rates and lower growth xxFigure O6.Fiscal

18、 policy has become less expansionary in most countries,while monetary policy has tightened in the region,except in China and Viet Nam xxFigure O7.Economic policy uncertainty has increased in the US and China xxiFigure O8.Growth in the region is influenced by development in the regions largest tradin

19、g partners xxiFigure O9.Trends in private consumption are flatter than in the pre-pandemic period xxiiFigure O10.Private investment as a share of GDP is lower than before the pandemic and so,in some countries,is public investment xxiiiFigure O11.Goods exports are beginning to recover but slowly;tour

20、ist arrivals have plateaued below pre-pandemic levels in several economies xxiiiFigure O12.The consumption share of GDP remains relatively low in China;investment is growing faster in manufacturing but is slowing down in infrastructure and real estate xxivFigure O13.Regional growth has been driven b

21、y capital accumulation rather than TFP growth xxviFigure O14.Sources of aggregate productivity growth xxviFigure O15.Productivity growth in EAP has been driven primarily by increases in productivity within firms xxviiFigure O16.The national frontier in EAP countries is falling behind the global fron

22、tier,especially in digital sectors xxviiiFigure O17.More productive firms report trade regulations,workforce skills and transport or telecommunication infrastructure,as important constraints to business operations xxviiiFigure O18.Higher SOE presence in EAP is associated with lower and higher foreig

23、n firm presence with higher productivity growth of frontier firms xxixFigure O19.The best managed firms in developing EAP have skills far below the best in advanced economies xxxFigure O20.Opening services to competition can increase productivity of services sectors and downstream manufacturing sect

24、ors xxx1.Recent DevelopmentsFigureI.1.The EAP region is growing faster than the rest of the world but is on a slower growth trajectory than before the pandemic 1FigureI.2.Output per capita rose above pre-pandemic levels in 2023 in a majority of EAP economies,but declined further in some Pacific Isla

25、nd Countries 2FigureI.3.Across sectors,ICT,finance and retail are growing rapidly,while tourism and real estate are still lagging 3FigureI.4.Poverty rates are expected to decline further 3Figure B1.1.Extreme poverty(monetary and non-monetary)has remained stubbornly high in Papua New Guinea 4Figure B

26、1.2.Non-monetary measures suggest pockets of significant deprivation in the region 5FIRM FOUNDATIONS OF GROWTHvLIST OF CONTENTS2.DeterminantsFigureI.5.Private consumption has sustained growth in all the major countries;services exports have helped in Malaysia,the Philippines,and Thailand,and public

27、investment in China,Indonesia and the Philippines;private investment and goods exports remain weak 7FigureI.6.External and domestic factors affecting economic growth 8FigureI.7.Three linked international developments will shape economic performance in the EAP countries:recovering global trade,increa

28、sing trade-distorting measures,and tight financial conditions 8FigureI.8.The number of new trade-distorting measures implemented against EAP countries have been rapidly increasing while those implemented by EAP countries have declined in recent years 9Figure B2.1.The number of industrial measures st

29、rongly correlates with the dollars spent 9Figure B2.2.The rich and large are the prime practitioners of industrial policy 10FigureI.9.Public and private debt has significantly increased over the last decade 11FigureI.10.Interest payment on external debt has significantly increased in 2023 in most co

30、untries 11FigureI.11.Fiscal policy has become less expansionary in most countries 12Figure I.12.Monetary policy has tightened in the region,except in China and Viet Nam 12FigureI.13.CPI inflation is declining;some countries face deflationary pressures 13FigureI.14.Co-movements between Chinas produce

31、r prices and EAPs producer and consumer prices 13FigureI.15.Major capital outflows from China while currencies are weakening in all economies 14FigureI.16.Economic policy uncertainty has increased in recent years in EAP 14Figure I.17.Growth in the region is influenced by development in the regions l

32、argest trading partners 15Figure I.18.Macroeconomic uncertainty in the United States and China can negatively impact output in the EAP regions economies 15FigureI.19.Domestic demand has bottomed out,but the pace of growth remains slow 16FigureI.20.Trends in private consumption are flatter than in th

33、e pre-pandemic period 16FigureI.21.Private investment as a share of GDP is lower than before the pandemic and so,in some countries,is public investment 17FigureI.22.Investment growth is closely associated with export growth,policy uncertainty,corporate and government debts 17Figure B3.1.Chinas inves

34、tment rotation 18Figure B3.2.Manufacturing investment is partly driven by support to priority sectors 19Figure B3.3.A(too)gradual rebalancing to consumption-led growth 19Figure B3.4.A rising capital output ratio suggests declining returns to investment 20FigureI.23.Goods exports are beginning to rec

35、over but slowly 21FigureI.24.Changes in trade and industrial policies continue to shift patterns of trade 22FigureI.25.Tourist arrivals have plateaued below pre-pandemic levels in several economies 23Figure B4.1.Airline passenger arrivals to EAP have largely recovered but have plateaued at below pre

36、-pandemic levels 243.Outlook and RisksFigureI.26.Growth expected to remain below pre-pandemic 27Figure B5.1.Tourism,remittances,rents and grants are the major drivers of GDP growth in Pacific Island economies 29Figure B5.2.GDP growth in Pacific Island countries is anticipated to stabilize 30FigureI.

37、27.Chinas importance as the destination for domestic value-added has significantly increased 30FigureI.28.Smaller economies are vulnerable to external financial conditions 31FigureI.29.Geopolitical risk has increased following the Israel-Hamas conflict after October7,2023 31Figure B6.1.More ships ar

38、e avoiding the Suez Canal following the rise in Yemen Houthi attacks since December 2023,while traffic in the Panama Canal has decreased due to drought 32EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024viLIST OF CONTENTSFigure B6.2.Shipping costs from the EAP region to several destinations have

39、increased 33Figure B6.3.Measures of stress in the global maritime supply chain network have increased due to recent disruptions in the Suez Canal 344.PoliciesFigureI.30.The COVID-19 shock accelerated the upward trend in the public-debt-to-GDP ratio observed inmost developing EAP countries since the

40、GFC of 20082009 35FigureI.31.Public debt as a share of GDP is likely to increase due to higher primary deficits,higher interest rates and lower growth 37FigureI.32.Even though the rates of interest are expected to remain below the rates of growth,increasing debt could push up the former and lower th

41、e latter 37Figure A1.Both industrial and trade policies are correlated with GDP per capita 40Figure A1.1.Evolution of uncertainty in the global economy and U.S.41Figure A1.2.Evolution of economic uncertainty in EAP 42Figure A1.3.Impact of US uncertainty on EAP 42Figure A1.4.Impact of US and China un

42、certainty on EAP 43Figure A2.1.The geopolitical risk has translated into a small premium on Brent crude oil prices 44Figure A2.2.Depending on the duration and scale of any escalation,prices could rise but remain below$90/bbl;under a more extreme scenario,prices would hover around US$100 455.Special

43、Focus:Firm Foundations of GrowthFigureII.1.Regional growth has been driven by capital accumulation rather than TFP growth47FigureII.B1.1 Share of cross-country labor productivity differences explained by Human Capital48FigureII.2.Aggregate productivity growth has slowed in developing East Asia49Figu

44、reII.3.Sources of aggregate productivity growth49FigureII.4.Productivity growth in EAP has been driven primarily by increases in productivity within firms50Figure B1.Reallocation of employment towards more productive firms is low relative to the US51FigureII.5.New technologies have diffused rapidly

45、in the EAP region52FigureII.6.New technologies matter for within-firm productivity growth52FigureII.7.In advanced economies,frontier firms are growing at a faster pace than other firms,especiallyin digital sectors54FigureII.8A.but in the EAP region,productivity growth of frontier manufacturing firms

46、 has been slowerthan that of other firms56FigureII.8B.and similarly for frontier firms in services57FigureII.9.The national frontier in EAP countries is falling behind global frontier,especially in digital sectors57FigureII.10.Gaps in technological use between developing East Asia and advanced count

47、ries are wider formore sophisticated firms 59FigureII.11.The wide technological sophistication gaps between the best national firms and the best firms globally is apparent in some countries in other regions 60FigureII.12.Technological sophistication of the average firm in EAP is in line with similar

48、 income countries,but the most advanced firms in EAP are behind the most advanced elsewhere 61FigureII.13 Use of advanced data analytics software is limited in developing EAP 61FigureII.14.In principle,higher competition raises productivity growth of frontier firms 62Figure II.15.Higher SOE presence

49、 is associated with lower entry and greater concentration 62FigureII.16.Higher SOE presence in EAP is associated with lower and higher foreign firm presence with higher productivity growth of frontier firms 63FigureII.17.SOEs account for large share of activity in EAP 63FigureII.18.Firm entry has sl

50、owed in EAP,especially in digital sectors 64FigureII.19.Most EAP countries restrict services trade more than other economies at comparable levels of development 65FIRM FOUNDATIONS OF GROWTHviiLIST OF CONTENTSFigureII.20.China,Lao PDR,Philippines and Viet Nam display border non-tariff measures higher

51、 than the world average 68FigureII.21 More productive firms report trade regulations,workforce skills and transport or telecommunication infrastructure,as important constraints to business operations 69FigureII.22.However,the most productive firms report fewer constraints relating to business licens

52、ing,corruption and the courts,electricity infrastructure or taxes 69FigureII.23.High-speed broadband is unevenly available within and across EAP countries 70FigureII.24.Skills are unevenly available in EAP 70FigureII.25.The best managed firms in developing EAP have skills far below the best in advan

53、ced economies 71FigureII.26.Openness to foreign investment is positively associated with technology diffusion and productivity 72Figure II.27.Opening services to competition can increase productivity in these services sectors and downstream manufacturing sectors that use services inputs 72FigureII.2

54、8.Diffusion of platforms in PHL can be seen as a competition shock that increases firm productivity 73FigureII.29.Firm TFP or data analytics use is strongly associated with having both access to fiber broadband and foreign ownership 73FigureII.30.More innovative firms have higher demand for analytic

55、al or interpersonal skills 74EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024viiiLIST OF CONTENTSList of TablesOverviewTable1.GDP growth forecast xxv3.Outlook and RisksTable1.GDP growth forecast 284.PoliciesTable2.Financial vulnerabilities in EAP 38FIRM FOUNDATIONS OF GROWTHixLIST OF CONTENTSLis

56、t of Boxes1.Recent DevelopmentsBox1.The last mile in poverty reduction in the EAP region:The case of Papua New Guinea42.DeterminantsBox2.EAP and potentially trade-distortive protectionist and industrial policies9Box3.Chinas elusive quest for balanced growth18Box4.Tourism recovery in the EAP233.Outlo

57、ok and RisksBox5.Economic recovery and outlook in the Pacific Island Countries29Box6.Risks and potential consequences of disruptions in the shipping industry324.PoliciesBox7.Debt accounting36Box A1.Implications of heightened global uncertainty for EAP40Box A2.Risks from disruptions in commodity mark

58、ets445.Special Focus:Firm Foundations of GrowthBoxII.B1.A new measure of the contribution of human capital accumulation to labor productivity47BoxII.B2.Creating productive jobs reallocation of employment in EAP51BoxII.B3.Frontier Firms and Technology Diffusion in Viet Nam53BoxII.B4.Who are the front

59、ier firms?53BoxII.B5.Classifying digital-intensive sectors55BoxII.B6.Competition and Economies of Scale-Kiribati Coconut Industry68BoxII.B7.Targeted Support to Firms75Box II.A1.Measuring the Productivity Frontier76FIRM FOUNDATIONS OF GROWTHxiPREFACE AND ACKNOWLEDGMENTSPreface and AcknowledgmentsThis

60、 report is a collective endeavor and involved several parts of the World Bank including the EAP and EFI.It was prepared by a core team comprising Francesca de Nicola,Daisuke Fukuzawa,Ergys Islamaj(Task Team Leader),Duong Trung Le,Jonathan Timmis and Aaditya Mattoo.Other members of the team were Omar

61、 Arias,Alessandro Barattieri,Caroline Gerd G De Roover,Jongrim Ha,Narya Ou,Agustin Samano,and Cecile Wodon.Significant contributions to the first part of the report were made by Kevin C.Chua,Reno Dewina,Sebastian Eckardt,Jun Ge,Yusha Li,Yuntian Lu,Valerie Mercer-Blackman,Elitza Mileva,Veronica Sonia

62、 Montalva Talledo,Cordula Rastogi,Sharad Alan Tandon,Kaltrina Temaj,Anna Twum,Daria Ulybina,and Guillermo Verduzco Bustos.The Special focus on“Firm Foundations of Growth”reflects joint work between EAPCE and IFC.It benefited from significant contributions by Arlan Brucal,Xavier Cirera,Elwyn Davies,E

63、dne Gambe,Leonardo Iacovone,Antonio Neto,Trang Tran,and analysis for the Philippines benefited from research collaborations with the ADB,namely,Benedict Evangelista,Jiang Yi and Martino Pelli.Manuela V.Ferro provided valuable guidance and helpful comments.We are grateful for stimulating discussions,

64、comments and inputs to Paolo Agnolucci,Maria Angelica,Jean Fransois Arvis,Diomedes Berroa,Dandan Chen,Alba Suris Coll Vinent,Ndiame Diop,Benedict Eijbergen,Yasser El-Gammal,Julia Fraser,Samuel Christopher Hill,Aleksander Kremer,Jessie McComb,Dawit Mekonnen,Lars Moller,Lalita M.Moorty,Alen Mulabdic,R

65、inku Murgai,Zafer Mustafaoglu,Coleman Nee,Cecile Thioro Niang,Habib Rab,Rajesh Rohatgi,Michele Ruta,Giovani Ruta,Mariam Sherman,Janmejay Singh,Carolyn Turk,Gonzalo Varela,Ekaterine T.Vashakmadze,Mara Warwick,Fabricio Zarcone,staff of the EAP region who participated in the review meetings on February

66、 6 and March 5,2024,and the EAP Regional Management Team meeting on March 7,2024.We greatly appreciate the support for dissemination provided by Geetanjali Chopra,Mariana Lucia De Lama Odria,Mark Felsenthal,and Kym Louise Smithies.The following staff from the Macroeconomics,Trade and investment Glob

67、al Practice and the Poverty and Equity Global Practice prepared country-specific macroeconomic outlook pages:Dwi Endah Abriningrum,Vishesh Agarwal,Tanida Arayavechkit,Kiatipong Ariyapruchya,Mehwish Ashraf,Mahama Samir Bandaogo,Undral Batmunkh,Nadia Belhaj Hassine Belghith,Andrew Blackman,Yew Keat Ch

68、ong,Kevin C.Chua,Souleymane Coulibaly,Andrea Coppola,Kevin Thomas Garcia Cruz,Somneuk Davading,Quang Hong Doan,Kim Alan Edwards,Karen Annette Lazaro Enriquez,David M.Gould,Indira Maulani Hapsari,Rashad Hasanov,Faya Hayati,Ahya Ihsan,Assyifa Szami Ilman,Taufik Indrakesuma,Wendy Karamba,Demet Kaya,Yus

69、ha Li,Sodeth Ly,Dorsati Madani,Kemoh Mansaray,Wael Mansour,Pedro Miguel Gaspar Martins,Elitza Mileva,Thi Da Myint,Darian Naidoo,Shohei Nakamura,Konesawang Nghardsaysone,Thu-Ha Thi Nguyen,Ruth Nikijuluw,Samuel Nursamsu,Anthony Obeyesekere,Yus Medina Pakpahan,Utz Johann Pape,Keomanivone Phimmahasay,Ru

70、slan Piontkivsky,Sharon Faye Alariao Piza,Warunthorn Puthong,Ririn Salwa Purnamasari,Rong Qian,Habib Rab,Ratih Dwi Rahmadanti,Thanapat Reungsri,Alief Aulia Rezza,Anna Robinson,Sutirtha Sinha Roy,Jose Luis Diaz Sanchez,Apurva Sanghi,Shakira Binti Teh Sharifuddin,Reshika Singh,Bambang Suharnoko Sjahri

71、r,Lodewijk Smets,Katherine Anne Stapleton,Ekaterine T.Vashakmadze,Dung Viet Do,Veronica Sonia Montalva Talledo,Sharad Alan Tandon,Kathleen Victoria Tedi,Sailesh Tiwari,Kimsun Tong,Tuimasi Radravu Ulu,Phonthanat Uruhamanon,Ralph Van Doorn,Matthew Wai-Poi,Ikuko Uochi,Samuel Wills,and Judy Yang.The wor

72、k was managed by Sebastian Eckardt and Lars Christian Moller for the Macroeconomics,Trade and investment Global Practice,and by Rinku Murgai for the Poverty and Equity Global Practice with support from Anna Twum(Macroeconomics,Trade and investment Global Practice).Benoit Philippe Marcel Campagne,Ale

73、xander Haider,Monika Anna Matyja,and Kristina Catherine Tan Mercado made contributions to the EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024xiiPREFACE AND ACKNOWLEDGMENTSmodel,table production,and assisting staff with their forecasts.Deviana Djalil,Sandra Buana Sari and Yu Shang provided techn

74、ical support.The report was edited and typeset by Circle Graphics,Inc.,Reisterstown,MD.Throughout the report,geographic groupings are defined as follows:Developing East Asia and Pacific comprises Cambodia,China,Indonesia,Lao Peoples Democratic Republic(PDR),Malaysia,Mongolia,Myanmar,Papua New Guinea

75、,the Philippines,Thailand,Timor-Leste,Viet Nam,and the Pacific Island Countries.The Pacific Island Countries comprise Fiji,Kiribati,the Marshall Islands,the Federated States of Micronesia,Nauru,Palau,Samoa,the Solomon Islands,Tonga,Tuvalu,and Vanuatu.The ASEAN member countries comprise Brunei Daruss

76、alam,Cambodia,Indonesia,Lao PDR,Malaysia,Myanmar,the Philippines,Singapore,Thailand,and Viet Nam.The ASEAN-5 comprise Indonesia,Malaysia,the Philippines,Thailand,and Viet Nam.The analysis in this report is based on the latest country-level data available as of March 22,2024.FIRM FOUNDATIONS OF GROWT

77、HxiiiLIST OF ABBREVIATIONSList of AbbreviationsAEAdvanced EconomyAIArtificial IntelligenceASEANThe Association of Southeast Asian NationsCOVIDCoronavirus DiseaseCPIConsumer Price IndexEFIEquitable Growth Finance and InstitutionsEMBIEmerging market Bond IndexEMDEEmerging Markets and Developing Countr

78、iesEPUEconomic Policy UncertaintyEUEuropean UnionEVElectric VehicleFDIForeign Direct InvestmentGDPGross Domestic ProductGFCGlobal Financial CrisisGNIGross National IncomeGVCGlobal Value ChainHHIHerfindahlHirschman IndexHICHigh Income CountryICTInformation and Communications TechnologyIDSInternationa

79、l Debt StatisticsIMFInternational Monetary FundLGFVLocal Government Financing VehicleLMICLower Middle Income CountryMSMEMicro,Small and Medium Enterprise MPUMonetary Policy UncertaintyNIPONew Industrial Policy ObservatoryNPLNonperforming loansNTMNon-tariff measuresOECDOrganisation for Economic Co-op

80、eration and DevelopmentppPercentage pointPMIPurchasing Managers indexPPPPurchasing Power ParityRCEPRegional Comprehensive Economic PartnershipRHSRight Hand SideROWRest of the WorldSMESmall and Medium EnterpriseSDStandard DeviationSOEState-Owned EnterpriseSTRIServices Trade Restrictions IndexTFPTotal

81、 Factor ProductivityUMICUpper Middle Income CountryUNFPAUnited Nations Population FundVATValue Added TaxVARVector autoregressionVIXVolatility IndexWDIWorld Development IndicatorWEOWorld Economic OutlookWTOWorld Trade OrganizationRegions,World Bank Classification and Country GroupsEAPEast Asia and Pa

82、cificECAEastern Europe and Central AsiaLACLatin America and the CaribbeanMNAMiddle East and North AfricaSARSouth AsiaSSASub-Saharan AfricaEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024xivLIST OF ABBREVIATIONSCountry/Economy AbbreviationsCHNChinaEUEuropean UnionFJIFijiFSMFederated States of Mic

83、ronesiaHKGHong Kong SAR,ChinaIDNIndonesiaJPNJapanKHMCambodiaKIRKiribatiKORRepublic of KoreaLAOLao Peoples Democratic RepublicMNGMongoliaMMRMyanmarMYSMalaysiaNRUNauruPHLPhilippinesPICsPacific Island CountriesPLWPalauPNGPapua New GuineaRMIRepublic of the Marshall IslandsSLBSolomon IslandsTHAThailandTL

84、STimor-LesteTONTongaTUVTuvaluTWNTaiwan,ChinaUKUnited KingdomUSA/USUnited StatesVNMViet NamVUTVanuatuWSMSamoaCurrency UnitsBThai bahtCRCambodian rielDVietnamese dongF$Fiji dollarKMyanmar kyatKPapua New Guinea kinaKipLao kipPPhilippine pesoRMMalaysian ringgitRMBChinese renminbiRpIndonesian rupiahSI$So

85、lomon Islands dollarTogMongolian tugrikUS$Timor-Leste(U.S.dollar)US$United States dollarxvFIRM FOUNDATIONS OF GROWTHAbstrActAbstractDeveloping East Asia and Pacific is growing faster than the rest of the world but slower than before the pandemic.While recovering global trade and easing financial con

86、ditions are expected to support economies in the region,increasing debt,protectionism and policy uncertainty could dampen growth.Regional growth is projected to ease to 4.5 percent in 2024 from 5.1 percent last year.Growth in developing East Asia and Pacific excluding China is projected to pick up t

87、o 4.6 percent this year from 4.4 percent in 2023.Growth in China is projected to moderate to 4.5 percent this year from 5.2 percent in 2023,because of near term problems,such as high debt and a weak property sector,as well as longer-term challenges,such as aging and trade frictions.Growth among Paci

88、fic Island countries is forecast to decline to 3.6 percent in 2024 from 5.6 percent last year,as the post-pandemic rebound dissipates.EAPs current macroeconomic challenges risk obscuring the microeconomic foundations of longer-term growth.Over the last decade,growth has been driven primarily by inve

89、stment rather than by increased productivity of firms.Now private investment is weak and productivity declining further inhibiting the incentive to invest.Firms are the protagonists of productivity growth.Some of the less productive firms in EAP countries are beginning to catch up with the more prod

90、uctive ones.But the most productive firms in the region are not taking full advantage of new technologies and not seeing the productivity growth of the leading global firms.For example,in digital manufacturing sectors,such as electronics,between 2005 and 2015 the productivity of the top 5 percent of

91、 firms globally increased two-and-a-half times faster than the top firms in Indonesia,Malaysia,the Philippines and Viet Nam.Both incentives and capacity are a problem.Incentives for firms to compete and innovate have been diluted by explicit protection in services and implicit protection in goods.Th

92、e capacity to manage and innovate has been undermined by the inadequacy of skills.Using industrial policies to improve incentives and capacity will be hard because both fiscal resources and institutional capability are limited.Instead,bold policy action to unleash competition,improve infrastructure

93、and reform education could revitalize the regions economy.xviiFIRM FOUNDATIONS OF GROWTHOVERVIEWOverview GrowthMost economies in developing East Asia and Pacific(EAP),other than several Pacific Island Countries,are growing faster than the rest of the world(figure O1A;table O1),but slower than before

94、 the pandemic.Growth in China is projected to slow to 4.5percent in 2024,from 5.2percent in 2023,as the bounce back from the re-opening of the economy fades and proximate problems,such as elevated debt and weakness in the property sector,as well as longer-term structural factors,such as aging and tr

95、ade frictions,weigh on growth.The rest of the EAP region,which had suffered in 2023 from slow trade growth and tight financial conditions,is expected to grow by 4.6percent in 2024.The likely rebound in global goods trade and the gradual easing of global financial conditions are expected to offset th

96、e impact of China slowing down.The Pacific Island countries are expected to see slower growth at 3.6percent in 2024,as the post-COVID-19 rebound dissipates and the region moves towards its estimated long-term trend growth of 2.6percent.While output per capita has surpassed pre-pandemic levels in mos

97、t of the larger EAP economies,Myanmar,Papua New Guinea,Timor-Leste and several Pacific Island Countries are still struggling to get back to pre-pandemic levels(figure O1B).B.Evolution of GDP per capita compared to 2019Figure O1.The EAP region is growing faster than the rest of the world but slower t

98、han before the pandemic in most major economies;output per capita is still below pre-pandemic levels in most Pacific Island countries and declined further in someA.GDP growth across country groupsSource:World Economic Outlook database;United Nations;World Bank staff estimates.20151920202220232024f20

99、2468EAPChinaEAPexcludingChinaPacificIslandCountriesEMDEexcludingEAPAdvancedEconomiesPercent2520151050510152025ChinaViet NamMalaysiaIndonesiaCambodiaKiribatiPhilippinesLao PDRMongoliaTuvaluThailandFijiTongaMicronesia,F.S.PNGMarshall Isl.Timor-LesteSamoaVanuatuMyanmarSolomon Isl.Palau2020202120222023P

100、ercentxviiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024OVERVIEW DeterminantsEconomic performance in the region is being shaped by external and domestic developments(figure O2).The key external factors are recovering trade but an increase in trade protection combined with industrial policies,

101、and still tight financial conditions.Among the domestic factors,the most important are amplified public and private debt;the constrained policy stance,especially fiscal and monetary;and increased political and policy uncertainty.External factorsFirst,global trade is recovering even though global GDP

102、 growth is slowing down.Trade in goods and services grew only by 0.2 percent in 2023 but is projected to grow by 2.3 percent in 2024 even though GDP growth will slow down from 2.6 percent in 2023 to 2.4 percent in 2024(figure O3).The projected recovery in trade is attributable to improved real incom

103、es,as wage growth outpaces inflation,and demand shifts back towards more tradable goods from less tradable services.Second,even though inflation has been declining in major economies,core inflation in the US and EU remains elevated and labor markets remain tight,suggesting interest rates will remain

104、 higher than pre-pandemic levels in the in the foreseeable future.Third,almost 3,000 new trade-distorting measures were imposed in 2023,three times as large as those in 2019.A significant proportion of trade-distorting measures took the form of industrial policy.First,the most active users of indust

105、rial policy are the G-20 countries,such as the US,China,India and most of the countries in the EU(figure O4).Second,the number of industrial policy measures implemented also correlates positively with the level of development,except in the case of Brazil,China,India,and Russia.Third,the EAP countrie

106、s(other than China and Indonesia)were less prone to implementing industrial policies compared to other countries of similar size and level of development.Finally,the EAP countries are potentially exposed to the trade-distortive effects of such policies because the US,China,the Republic of Korea,and

107、Japan are important destination markets,and because the firms receiving subsidies are potential competitors of EAP firms.EAP countryeconomicperformanceExternal FactorsTrade distorting policyStill-tight financial conditionsIncreased indebtednessRecovering global tradeDomestic FactorsLimited macro pol

108、icy spacePolicy uncertaintyFigure O2.A combination of external and domestic factors is influencing economic growth in the EAP regionSource:World Bank staff illustration.xixFIRM FOUNDATIONS OF GROWTHOVERVIEWGDPTrade0246202220232024f2025fPercent10123456Jan-17Sep-17May-18Jan-19Sep-19May-20Jan-21Sep-21M

109、ay-22Jan-23Sep-23May-24Jan-25Sep-25USEuro AreaPercentGoodsInvestmentServices05001,0001,5002,0002,5003,0003,500200920102011201220132014201520162017201820192020202120222023Number of interventionsFigure O3.Three linked international developments will shape economic performance in the EAP countries:reco

110、vering global trade,increasing trade-distorting measures,and tight financial conditionsSource:World Bank,Global Trade Alert,Haver Analytics,Fed watch.Note:B.figure shows the number of new harmful measures implemented by all WTO members,adjusted for reporting lag.A.Global GDP and trade growthB.New tr

111、ade-distorting measuresC.Interest ratesDomestic factorsDebtBoth private and public debt have increased significantly as a share of GDP in most of the regions economies(figure O5A).Corporate debt has increased in China and Viet Nam by more than 40percentage points of GDP since 2010,and now exceeds th

112、e level in advanced economies.A 10percentage points increase in private debt to GDP is associated with a 1.1percentage point decline in investment growth.And household debt is now much higher in China,Malaysia and Thailand compared to levels in other emerging markets.Furthermore,public debt as a sha

113、re of GDP is likely to increase due to higher primary deficits,higher interest rates and lower growth(figure O5B).Highly indebted countries such as Lao PDR have experienced a large increase in interest payments in 2023.High debt is associated across countries and over time with lower growth and high

114、er interest rates(EAP Update April 2021).Macroeconomic policyMacroeconomic policy has retreated in most economies from the expansionary stance in the 20202022 period.Major economies in the region are projected to have a positive or neutral fiscal structural balance in the 202324 period compared to p

115、revious years(figure O6A).At the same time,policy interest rates have been raised in the EAP region to address the threat of inflation but remain lower than in other emerging market and developing economies(figure O6B)-because the region has generally been less affected by inflationary pressures and

116、 central banks have also utilized other monetary policy measures,such as adjusting reserve requirements.However,inflation has remained stubbornly high across the Pacific Island Industrial Policies:Measures vs.Development,2023Number of total measures2023-(in logs)GDP per Capita in 2021(in logs)654312

117、High IncomeEAPEMDEFitted valuesAUSAUTBELCANCHECZEDEUDNKESPFINFRAGBRGRCHKGHRVHUNIRLITAJPNKORNLDNZLPOLPRTSAUSGPSVKSVNSWEUSACHNIDNMYSTHAVNMARGBGDBOLBRAEGYINDMEXNPLPAKRUSTURUKRZAFFigure O4.The rich and large countries,i.e.the G20,are the prime practitioners of industrial policySources:World Bank staff e

118、laborations on data from NIPO and World Development Indicators.Note:New industrial policies,as defined by the NIPO,include both domestic industrial policies,as well as export promotion schemes and import trade barriers.All the potentially trade distortive measures are included.xxEAST ASIA AND THE PA

119、CIFIC ECONOMIC UPDATE APRIL 2024OVERVIEW020406080100Private DebtPublic Debt201520192023Percent of GDP420246200007201019202325200007201019202325EAP excluding ChinaChinaContribution of primary deficitContribution of growth relative to interest ratePercentage pointsFigure O5.Private and public debt is

120、higher than before the pandemic;public debt as a share of GDP is likely to increase due to higher primary deficits,higher interest rates and lower growthA.Private and public debtB.Contribution to debt-to-GDPSource:Institute of International Finance;World Economic Outlook,IMF,World Bank staff estimat

121、es.Note:A.Bars show median debt/GDP for EAP economies;private debt refers to nonfinancial corporate debt.B.Dotted area shows projections.See notes in Figure 31 for methodology.Percent of GDP21012ThailandMalaysiaPhilippinesIndonesiaChina20202220232401234567Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Ju

122、l-23Jan-24ChinaIndonesiaMalaysiaPhilippinesThailandViet NamPercentA.Change in structural balanceB.Policy rateFigure O6.Fiscal policy has become less expansionary in most countries,while monetary policy has tightened in the region,except in China and Viet NamSource:International Monetary Fund,Haver A

123、nalytics.xxiFIRM FOUNDATIONS OF GROWTHOVERVIEWCountries,as well as in Mongolia,Lao PDR and Myanmar,reflecting the raising prices of some commodities like rice,high dependence on imports,and/or rapid depreciation of currencies.China and Viet Nam are the two countries where rates have recently been re

124、duced due to weak domestic demand and distressed corporate sectors.Political and policy uncertaintyEconomic policy uncertainty index in the region has increased in recent years(figure O7).Political developments within countries as well as rising geopolitical tensions are fueling uncertainty.The resu

125、lting lack of predictability or clarity about government policies,market conditions,or geopolitical events,has a negative impact on investment growth,as investors hesitate to invest in new projects or expand their existing businesses.The impact of external and domestic factorsA growth shock originat

126、ing in the regions largest trading partners,China and the US,would impact EAP economies through bilateral trade and financial flows,including foreign direct investment(FDI)(World Bank 2023a).An unexpected 1percentage point decline in US(Chinas)GDP growth rate would decrease growth rate in the other

127、developing EAP countries,on average,by an estimated 0.5(0.3)percentage points(figure O8A).Unanticipated shocks to US monetary policy also affect growth;a 25 basis points increase lowers growth by an estimated 0.5percentage points.IndexIndex00.10.20.30.40.50.601002003004005006007002015201720192021202

128、3ChinaGlobalOther EAP(rhs)Omicron wave&war in Ukraine COVIDAlpha waveFigure O7.Economic policy uncertainty has increased in the US and ChinaWorld and economic policy uncertaintySource:World Uncertainty Index;Economic Policy Uncertainty Index.Note:“China”shows Economic Policy Uncertainty index based

129、on South China Morning Post and mainland China newspapers.“Other EAP”shows median of Indonesia,Malaysia,Thailand,Philippines and Viet Nam using World Uncertainty Indexs 4-quarter moving average.“Global”shows global Economy Policy Uncertainty index.3-quarter moving average.Percentage point1.00.80.60.

130、40.20.00.20.40.6t=061224t=061224US Macro uncertaintyshockChina MacrouncertaintyshockB.Impact of 1 std uncertainty shock in US and China of EAP industrial output growth1.20.80.40.0US GDPChina GDPUS monetarypolicyPercentage pointFigure O8.Growth in the region is influenced by development in the region

131、s largest trading partnersA.Impact of 1 pp decrease in China and US GDP growth,and 25 bps increase in US 2-year yieldSource:World Bank staffs estimations.Notes:The results are based on a panel Vector autoregressions for Indonesia,Malaysia,Philippines and Thailand.A.Bars show impact of the following

132、shocks:one percentage point decrease in China and US growth,and 25 bps increase in US 2-year interest rate yield.Effects estimated using a structural Bayesian VAR model.B.Bars show dynamic responses of EAP productions to a one-standard-deviation increase in macroeconomic uncertainty in the US and Ch

133、ina.See Box A1 for further details.xxiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2024OVERVIEWApart from changes in the level of macroeconomic variables in the US and China,an increase in macroeconomic uncertainty also has an impact on EAP countries,by inhibiting investment and consumption.A on

134、e standard deviation increase in macro uncertainty in the US and China is associated with,respectively,a 0.5 and 0.3percentage point decline in industrial output growth and a 3percent drop in asset prices in EAP within one year(figure O8B).ConsumptionEven though retail sales of most countries surpas

135、sed their pre-pandemic levels,the growth trend of retail sales is lower than the pre-pandemic rate in most EAP economies(Figure O9).Proximate factors such as an increase in household debt(e.g.,in Malaysia,Thailand),depreciated property values(e.g.,in China),and increased political uncertainty have w

136、eighed on consumer confidence and hence spending.InvestmentPrivate investment as a share of GDP has been lower than pre-pandemic levels in developing EAP in recent years(figure O10),due to higher debt,interest rates and policy uncertainty.Public investment generally supported economic activity durin

137、g the pandemic and exceeded the pre-pandemic levels in terms of GDP share in Indonesia,Philippines,Thailand,and Viet Nam.ExportsAfter falling by more than 20percent from their peak in the second quarter of 2022 in Indonesia and Malaysia,and by more than 10percent in China and Viet Nam,goods exports

138、across EAP countries have begun to recover with the world economy during the second half of 2023(figure O11A).As of Q4-2023,goods export growth had returned to or been approaching positive territory in China,Thailand,and Viet Nam.The revival of tourism has helped services exports in Malaysia and Fij

139、i,but on average total tourist arrivals(and tourism receipts)seem to have plateaued below the pre-pandemic level,in part because Chinese tourists have not returned in pre-pandemic numbers(figure O11B).Index6080100120140160180Jan-15Jan-16Jan-17Jan-18Jan-19Jan-20Jan-21Jan-22Jan-23Jan-24COVIDAlpha wave

140、DeltawaveOmicronwaveIndex6080100120140160180Jan-15Jan-16Jan-17Jan-18Jan-19Jan-20Jan-21Jan-22Jan-23Jan-24COVIDAlpha waveDeltawaveOmicronwaveFigure O9.Trends in private consumption are flatter than in the pre-pandemic periodA.Real retail sales,EAP excl.ChinaB.Real retail sales,ChinaSource:Haver Analyt

141、ics.Note:Figure shows seasonally adjusted real retail sales indexed to January-2015.When volume-based retail sales data were not available,value-based retail sales were adjusted by the consumer price index.Chinas retail sales include limited services sectors.Straight line shows pre-COVID trend and d

142、ashed line shows the trend since January 2021.A.Unweighted average of Indonesia,Malaysia,Philippines(manufacturing sales),Thailand,and Viet Nam.xxiiiFIRM FOUNDATIONS OF GROWTHOVERVIEW051015202530Indonesia Viet NamChinaThailandMalaysiaPhilippines201519202223Percent of GDPIndonesiaViet NamChinaThailan

143、dMalaysiaPhilippines201519202223Percent of GDP0510152025Figure O10.Private investment as a share of GDP is lower than before the pandemic and so,in some countries,is public investmentSource:World Bank staff estimates.A.Private investmentB.Public investment2502550Jan-22Jun-22Nov-22Apr-23Sep-23Feb-24C

144、hinaIndonesiaMalaysiaPhillipinesThailandViet NamEAP averagePercent020406080100120140Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24CambodiaMalaysiaPhilippinesThailandViet NamFijiIndonesiaEAP averageIndexFigure O11.Goods exports are beginning to recover but slowly;tourist arrivals have plateau

145、ed below pre-pandemic levels in several economiesA.Goods exports(year-on-year growth)B.Tourist arrivals compared to pre-pandemicSource:Haver Analytics.Note:A.three-month moving average.B.figure shows monthly tourist arrivals indexed to the same month in 2019.xxivEAST ASIA AND THE PACIFIC ECONOMIC UP

146、DATE APRIL 2024OVERVIEWGDP per capita,logChina,20012022EAP,2022AEs,2022EMDEs,2022Percent of GDP20406080100120681012105051015ManufacturingReal estateInfrastructure2015192023PercentFigure O12.The consumption share of GDP remains relatively low in China;investment is growing faster in manufacturing but

147、 is slowing down in infrastructure and real estateSource:WDI,Haver Analytics.Note:A.countries with more than 1.5 million population are shown.B.figure shows average year-on-year growthA.Household consumptionB.Investment growth by sectorChinaAfter a strong post-COVID rebound in early 2023,growth mome

148、ntum in China has slowed.Deflationary pressures,falling capacity utilization,and a sluggish labor market suggest that aggregate demand is falling short of aggregate supply.Investment in infrastructure and real estate major drivers of rapid growth in recent decades has slowed significantly,as the pro

149、perty market is undergoing a protracted but necessary correction while high debt levels and diminishing returns to investment constrain further infrastructure expansion.China is aiming to transition to a more balanced growth path but the quest to ignite alternative demand drivers is proving difficul

150、t.A central challenge is the high rate of savings and hence the relatively low domestic consumption(figure O12A).To sustain aggregate demand,China needs high rates of investment,high levels of export,or high levels of government spending.Over the past decade China did succeed in reducing its depende

151、nce on exports and switching from external to domestic sources of demand.But the result was a domestic imbalance,with a heavy reliance on investment in infrastructure and real estate.Now China is attempting a rebalancing within investment,favoring advanced manufacturing(figure O12B).The risk is a ne

152、w imbalance could emerge between manufacturing capacity and demand,both domestic and international.To support aggregate demand,the government has announced moderate macroeconomic stimulus.The governments cautious macroeconomic policy approach suggests that it is seeking to strike a balance between p

153、roviding near-term stimulus and achieving the longer-term goal of stable and sustainable growth.Addressing structural imbalances in aggregate demand will require more than conventional fiscal stimulus.Instead,reforms that reduce precautionary savings,such as strengthening social protection and pensi

154、on,more progressive taxation,and reallocation of public spending from infrastructure to human capital,would stimulate consumption and lead to more balanced growth.At the same time,a transparent and predictable policy environment and equal treatment of enterprises regardless of ownership would suppor

155、t investor confidence and encourage private investment while allowing market forces to play a greater role in the allocation of capital,mitigating risks of over-capacity.xxvFIRM FOUNDATIONS OF GROWTHOVERVIEW Special focus:Firm foundations of growthWhile growth in per capita incomes in the EAP region

156、 has surpassed that in most other emerging market and developing economies in the last two decades,it was driven primarily by investing in capital rather than improvements in total productivity growth(figure O13).Growth in labor productivity can arise from greater capital(capital deepening),improvem

157、ents in human capital(through education and skills)and higher total factor productivity or TFP(the part of production that is attributable to innovation because it cannot be explained by increases in quantities of labor or physical and human capital).In the long-run,productivity(TFP)the efficiency w

158、ith which inputs are transformed into outputs-is the key driver of growth.Understanding the sources of declining productivity growth in EAP economies would help design policies that support long-term growth.Table1.GDP growth forecast 2015192020202120222023Apr 2024 forecastOct 2023 forecastfor 2024fo

159、r 2025for 2023for 2024East Asia&Pacific6.41.37.53.45.14.54.35.04.5East Asia&Pacific(excluding China)4.93.52.75.84.44.64.84.64.7Pacific Island Countries3.010.23.56.45.63.63.35.23.6China6.72.28.43.05.24.54.35.14.4Indonesia5.02.13.75.35.04.95.05.04.9Malaysia4.95.53.38.73.74.34.43.94.3Philippines6.69.55

160、.77.65.65.85.95.65.8Thailand3.46.11.62.51.92.83.03.43.5Viet Nam7.12.92.68.15.05.56.04.75.5Cambodia7.13.13.05.25.45.86.15.56.1Lao PDR6.60.52.52.73.74.04.13.74.1Mongolia4.64.41.65.07.14.86.65.16.1Myanmar6.46.69.012.04.01.32.03.02.0Papua New Guinea4.03.20.14.32.74.83.63.05.0Timor-Leste5.18.32.94.02.13.

161、64.52.43.5Palau1.09.113.42.00.812.411.91.410.4Fiji3.117.04.920.08.03.53.37.74.0Solomon Isl.3.03.40.64.11.92.83.11.82.7Tuvalu6.74.31.80.73.93.52.43.93.5Marshall Isl.4.81.81.04.53.03.02.03.03.0Vanuatu3.55.00.61.92.53.73.51.52.6Kiribati2.50.68.53.94.25.62.02.52.4Tonga2.40.52.72.02.62.52.22.62.5Samoa3.4

162、3.17.15.38.04.53.66.04.0Micronesia1.91.83.20.60.81.11.72.82.8Nauru2.40.77.22.80.61.41.22.01.5Source:World Bank;World Bank estimates and projections.Note:Percent growth of GDP at market prices.Values for 2023 for the small island economies refer to GDP growth estimates.Values for Timor-Leste represen

163、t non-oil GDP.For the following countries,values correspond to the fiscal year:Federal states of Micronesia,Palau,and Republic of the Marshall Islands(October 1September 30);Nauru,Samoa,and Tonga(July 1June 30).Myanmar growth rates refer to the fiscal year from October to September.xxviEAST ASIA AND

164、 THE PACIFIC ECONOMIC UPDATE APRIL 2024OVERVIEWThe special focus of this Update examines the challenge of productivity growth through novel firm level analysis;the factors behind its slowdown;and what policies would reignite TFP,a vital driver of economic growth.What has happened to firm-level produ

165、ctivity?Aggregate productivity growth is a dynamic process involving:(i)productivity growth within existing firms;(ii)thereallocation of market share to more productive firms;and(iii)firm entry and exit(figure O14).Correctly diagnosing thesources of the productivity slowdown matters for prescribingt

166、he right policies.In many East Asian economies,productivity growth is mostly due to improvements in productivity within existing firms(figure O15).In this respect,firms in the region resemble those in other countries,including the US but also Latin America and in Eastern Europe.Since most productivi

167、ty growth has been due to within firm productivity growth,the slowdown in aggregate productivity is likely to reflect a slowdown in within-firm growth.Why the productivity slowdown has come at a time of rapid technological progress is a puzzle.20020720131920202120222320020720131920202120222320020720

168、1319202021202223200207201319202021202223ChinaEAP excludingChinaOther EMDEsAdvancedeconomiesTFPCapital deepeningHuman capitalLabor productivityPercentage543210123456789101112Figure O13.Regional growth has been driven by capital accumulation rather than TFP growthLabor productivity decompositionSource

169、:Conference Board,total economy database.Note:Figure shows unweighted median(EAP excluding China reflects 7 countries).TFP:Total factor productivity.Entry of moreproductive firmsArrival of new technologiesGrowth withinfrontier firmsExit of lessproductive firmsCatch-up growthwithin non-frontier firms

170、Diffusion of technologiesReallocation ofresources from less tomore productive firmsFigure O14.Sources of aggregate productivity growthSource:World Bank staff elaboration.Notes:Frontier firms refer to the most productive firms within a country and industry.xxviiFIRM FOUNDATIONS OF GROWTHOVERVIEWPerce

171、nt1208040040100602020Within-FirmReallocationEntryExitCHN-Manufacturing(19982007)IDN-Manufacturing(19962015)PHL-Manufacturing(20122018)VNM-Services(20112021)USA-Manufacturing(19972013)CHN-Manufacturing(20072013)MYS-Manufacturing(20002015)PHL-Services(20122018)VNM-Manufacturing(20012011)VNM-Manufactur

172、ing(20112021)Figure O15.Productivity growth in EAP has been driven primarily by increases in productivity within firmsSource:Indonesia,Malaysia,Philippines and Viet Nam reflects authors calculations using Statistical Office micro-data,China is taken from Brandt etal.(2020),USA is taken from Pancost

173、and Yeh(2022).Notes:Decompositions calculated at the 2-digit level and aggregated using value-added weights.Chart reflects the average of 5 or 6 yearly productivity changes,over the periods mentioned in the legend(5 or 6years depends upon country data availability).Note entry reflects only entry of

174、young firms,entry into the survey due to sampling changes have been excluded.What has happened to productivity within frontier and laggard firms?In the 1990s,new technologies were being adopted earlier by EAP frontier firms,defined as the most productive ones in a country,but diffusing more slowly t

175、o other firms than had been the case in the past(Cirera etal.,2021;Innovation Imperative Report).This pattern was consistent with the experience of advanced economies.However,the productivity growth of the national frontier firms in EAP economies has been falling further behind the global frontier i

176、n digital-intensive sectors in recent years,such as electronics(figure O16).The slowdown in growth of the national frontier is starker in digital-intensive sectors the same sectors where the best firms in rich countries are pulling away.For example,in digital manufacturing sectors,between 2005 and 2

177、015 the productivity of the global frontier increased by 76 percent,whereas the national frontier firms in Indonesia,Malaysia,the Philippines and Viet Nam increased their productivity by only 31 percent on average.For less digital-intensive sectors,the gap between the national frontier firms and the

178、 global ones is less stark.The relative stagnation of the national frontier is also observed in developing countries beyond EAP,though to a lesser extent.Since new technologies typically arrive first at the frontier,and then spillover to other firms,revitalizing the national frontier firms matters f

179、or the future growth of all firms.Advanced digital technologies,such as data analytics,are diffusing slowly to the national leaders in EAP.Unsurprisingly,firms in developing East Asia are less sophisticated than those in the advanced countries.However,whereas the average firm in EAP is somewhat behi

180、nd the average firm in advanced economies,the most sophisticated firms in EAP are far behind the most sophisticated firms globally(Cirera et al.,forthcoming).The relative lack of sophistication of the national frontier is also true beyond East Asia,although to a somewhat lesser degree.xxviiiEAST ASI

181、A AND THE PACIFIC ECONOMIC UPDATE APRIL 2024OVERVIEW Why are the leaders not leading?EAPs relative inertia in productivity growth may be because frontier firms do not have adequate incentives and because all firms lack the relevant capabilities.The most productive firms in East Asia and Pacific are

182、more likely to identify barriers to trade,paucity of skills and weakness in the transport and telecommunications infrastructure,as key constraints(figure O17).Firms require the right incentivesLow levels of competition could explain the relatively low productivity growth of frontier firms in EAP.Hig

183、her competition(or the threat of competition),which can come from openness to trade and investment,increases the incentives for frontier firms to innovate and grow(Aghion etal.,2009,2021).While manufacturing tariffs are relatively low in EAP countries,tariffs in agriculture and non-tariff measures i

184、n manufacturing still limit competition.Furthermore,product market regulations in China and Indonesia are 50percent more restrictive than in the US(OECD).Some EAP markets,for example in Viet Nam,are dominated by State Owned Enterprises(SOEs)that can also influence competitive conditions.In 1.41.210.

185、80.60.40.200.20.4200320062009201220152018Index(First Year=0)VNM-ManufacturingMYS-ManufacturingCHN-ManufacturingIDN-ManufacturingPHL-ManufacturingPHL-Services1.41.210.80.60.40.200.20.4200320062009201220152018Index(First Year=0)VNM-ManufacturingMYS-ManufacturingCHN-ManufacturingIDN-ManufacturingPHL-Ma

186、nufacturingPHL-ServicesFigure O16.The national frontier in EAP countries is falling behind the global frontier,especially in digital sectorsA.Digital-intensive sectorsDistance between national and global frontierSource:Authors calculations using Statistical Office micro-data and Criscuolo et al.(202

187、3)for global frontier.Notes:National frontier is defined as in the previous figure(the 90th percentile firm productivity for each country and industry).Digital intensity of sectors is defined according to Eurostat.B.Less digital-intensive sectors2nd Quartile3rd QuartileMost Productive Quartile0.000.

188、050.100.150.20Trade RegulationsSkillsTransportTelecommunicationsConstraint severity by labor productivity quartile (versus bottom quartile)Source:World Bank Enterprise Surveys.Notes:Manufacturing labor productivity quartiles are calculated within each country and year(applying sampling weights).Scor

189、es reflect the severity of constraint reported by firms(on the scale 0 to 4)within each quartile,relative to the bottom quartile least productive firms.Presents the results of firm-level regressions of reported constraints on labor productivity quartiles,controlling for firm size and country and yea

190、r fixed effects.Reflects data for 13 low-and middle-income EAP countries.Figure O17.More productive firms report trade regulations,workforce skills and transport or telecommunication infrastructure,as important constraints to business operationsxxixFIRM FOUNDATIONS OF GROWTHOVERVIEWEAP,the number of

191、 startups has fallen dramatically over the past decades,especially in digital-intensive sectors,and the region is increasingly full of aging incumbents.Frontier firms in EAP that are more exposed to competition show faster productivity growth(figure O18).Foreign owned frontier firms showed 5 per cen

192、t faster annual productivity growth than other frontier firms,whereas state-owned firms have 3 per cent slower productivity growth.Moreover,competition from foreign firms or state-owned firms within a sector can have important indirect spillovers on the growth of domestically or privately owned fron

193、tier firms.4321012345SOEForeignPercentPercent32211011223SOEForeignFigure O18.Higher SOE presence in EAP is associated with lower and higher foreign firm presence with higher productivity growth of frontier firmsSource:Authors calculations using Statistical Office micro-data for China,Indonesia and t

194、he Philippines.Notes:Direct effect of foreign ownership reflects the difference in annual TFP growth between foreign-owned and domestic-owned frontier firms.Frontier firms reflect the most productive 10%of firms within a country and industry.Indirect effect represents the differential annual TFP gro

195、wth for domestic-owned frontier firms in industries with 10%higher foreign ownership(measured as the share of industry sales due to foreign owned firms).State ownership(SOE)is defined similarly.A.Direct effectB.Indirect effectFirms require the right capabilitiesProductivity growth and adoption of so

196、phisticated technologies require advanced skills and high-quality digital infrastructure.While access to mobile broadband is widespread in EAP,high-speed fiber is unevenly available across and within countries.Some technologies(such as e-commerce)need only basic mobile broadband.In contrast,modern d

197、ata technologies(such as data analytics or cloud computing)require high-speed fiber broadband to send and receive data to and from customers/suppliers/within firms,and the right combination of digital and management skills to embed data-driven decision making within businesses.Access to skills and m

198、odern data infrastructure is uneven in the EAP.In 14 of the regions 22 middle-income countries,more than half of 10-year-olds are unable to read and understand an age-appropriate text.Even basic digital skills are not widely available in EAP,with less than a quarter of workers in Cambodia,Mongolia,P

199、hilippines,Thailand,and Viet Nam able to use the“copy and paste”function in a document.Over 50percent of innovating firms in Indonesia,Malaysia,Myanmar,the Philippines,Thailand,and Viet Nam cite a lack of managerial and leadership skills as a challenge when hiring new workers(World Bank 2022,Innovat

200、ion Imperative in East Asia).The average firms in both developed and developing EAP are on average less well managed than the US(see Figure O19).However,the best managed firms in developing EAP are behind the best managed in advanced EAP and far behind the best managed in the US.xxxEAST ASIA AND THE

201、 PACIFIC ECONOMIC UPDATE APRIL 2024OVERVIEW How can policy help boost productivity growth?While it may be presumed that capacity issues are purely an issue for laggard firms,our evidence in the previous section showed that frontier firms also do not have sufficient capacity in some respects,such as

202、management skills.We highlight complementary reforms to boost competition,digital infrastructure and skills as policy priorities for reigniting frontier firm productivity.Reform of goods and services markets can spur competition and accelerate productivity growth.While EAP goods markets are relative

203、ly open,liberalization of remaining tariffs and the relatively opaque non-tariff measures(NTMs)could increase exposure to competition at home and equip firms to compete abroad.For example,a recent survey reveals that 55percent of exporters in the EAP region see NTMs as a burden limiting their abilit

204、y to expand into new markets(ITS,2023).Elimination of restrictions on entry and operation in services too could have a pro-competitive impact(World Bank 2023).For example,services reforms in Viet Nam are associated with a more than 3percent increase in labor productivity of firms in these same secto

205、rs as well as downstream manufacturing(figure O20).Competition-enhancing policies have larger impacts when combined with infrastructure-improving policies and investment.Initial evidence from the rollout of the Philippines fiber backbone to 12 provinces suggests that this leads to increased use 1.51

206、.00.50.0Bottom 10%Median FirmTop 10%ChinaViet NamSingaporeAustraliaNew ZealandFigure O19.The best managed firms in developing EAP have skills far below the best in advanced economiesSource:Maloney and Sarrias(2017)using World Management Surveys.Notes:The charts reflect the gap in management scores b

207、etween the top 10 per cent best managed firms in EAP compared to the top 10 per cent best managed firms in US.Bottom 10 per cent and median are defined similarly.0.0500.050.10.150.2AllSOEForeignMarginal effect(percent)Private(small)Private(medium)Private(large)Marginal effect(percent)0.0500.050.10.1

208、50.250.2AllSOEForeignPrivate(small)Private(medium)Private(large)Figure O20.Opening services to competition can increase productivity of services sectors and downstream manufacturing sectorsA.Productivity effects of service reform on services firms (own-effect)B.Productivity effects of services refor

209、m on manufacturing firms(downstream effect)Source:World Bank staff estimation based on data from Viet Nam enterprise surveys 2008 and 2016.Note:OLS regression results.The dependent variable is the change in log value-added per worker between 2016 and 2008.The main explanatory variable is the change

210、in STRI values in Trade,Transport,Finance,Professionals,and Telecommunication sectors between 2016 and 2008 in Panel A,and the change in the“downstream”STRI for manufacturing sectors in Panel B.The downstream STRI is a sector-specific measure for each 2-digit manufacturing sector,calculated by the a

211、verage STRI of the above five services sectors weighted by the corresponding purchasing value from each manufacturing sectors.The regression sample in panel A consists of all enterprises operating in Trade,Transport,Finance,Professionals,and Telecommunication sectors,and all manufacturing enterprise

212、s in Panel B,in 2008 and 2016.All regressions control for firms baseline revenue and employment.Standard errors clustered at the industry level.xxxiFIRM FOUNDATIONS OF GROWTHOVERVIEWof e-commerce,but mainly for firms with higher quality connections and for firms in more competitive sectors.Openness

213、to foreign competition and access to fiber broadband for firms in the country both individually increase technology adoption,but their combined impact is more than double.Improving human capital is imperative and has at least three dimensions.First is fixing the foundation of basic skills on which m

214、ore advanced skills can be built(World Bank 2023).Teacher knowledge of content and teaching methods have been identified as key problems.Investing in teacher training is estimated to produce benefits in terms of discounted life-time earnings that are ten times larger than the costs.Second,individual

215、s must be equipped with the skills to work with new technologies as well as the ability to innovate.That requires an emphasis on investments in tertiary education to develop workers advanced cognitive,technical,and socio-emotional skills.To remedy these gaps,students need to be exposed early to a ra

216、nge of tasks,from the factory floor to R&D departments.Links need to be strengthened between research institutions and firms,including through incentives for research institution-industry collaboration.Third,is enhancing the abilities of managers already in the work force.Differences in management q

217、uality are an important contributor to productivity differences across countries.Recent research suggests that management quality can be improved.For example,firms provided with management consulting in Colombia improved their management practices and increased employment(Iacovone etal.,2022).Both i

218、ntensive and expensive one-on-one consulting and consulting in small groups of firms led to improvements in management practices of a similar magnitude(810percentage points)and in firm sales,profits and labor productivity.Such targeted support can be especially effective when combined with fostering

219、 competition,which motivates managers skill upgrading(McKenzie,2023).Recent DevelopmentsMost of developing East Asia and Pacific(EAP),other than several Pacific Island countries,is growing faster than the rest of the world but growth is slower than before the pandemic.In 2023,Chinas economy grew by

220、5.2 percent and the rest of the region by 4.4 percent(figure I.1),slower than the 6.7 percent and 4.9 percent,respectively,recorded during the 201519 period.The Pacific Island Countries,grew by an estimated 5.6 percent in 2023,faster than the 3 percent during 201519 period.FigureI.1.The EAP region i

221、s growing faster than the rest of the world but is on a slower growth trajectory than before the pandemicA.GDP growth across country groups20151920202220232024f202468EAPChinaEAPexcludingChinaPacificIslandCountriesEMDEexcludingEAPAdvancedEconomiesPercentB.GDP growth in East AsiaC.GDP growth in Pacifi

222、cSource:World Bank staff estimates.20151920202220232024f64202468PercentViet NamCambodiaChinaPhilippinesLao PDRMyanmarTimor-LesteIndonesiaMalaysiaMongoliaPNGThailand20151920202220232024fPercent8642024681012TuvaluMarshal isl.VanuatuSamoaFijiSolomon isl.KiribatiNauruTongaMicronesiaPalau1FIRM FOUNDATION

223、S OF GROWTHRECEnT DEvEloPMEnTsGrowth in the region is forecast to tick up to 4.5percent in 2024,but still lower than before the pandemic,as global conditions continue to improve,and inflationary pressures decline further.China is forecast to grow by 4.5percent in 2024 as the bounce back from the re-

224、opening of the economy fades and both proximate problems,such as elevated debt and weakness in the property sector,as well as longer-term structural factors,such as aging and decoupling,weigh on growth.The rest of the region,which had suffered in 2023 from slowing global growth and tightening financ

225、ial conditions,is expected to grow by 4.6percent in 2024.The likely recovery of global trade and the expected easing of global financial conditions are expected to offset the impact of China slowing down.The growth rate in the Pacific Island countries is expected to moderate to 3.6percent in 2024,as

226、 the post-CovID-19 rebound dissipates.While output per capita has surpassed pre-pandemic levels in most of the larger EAP economies,recovery has been uneven across the region.Per capita output in China and viet nam had already exceeded pre-pandemic levels in 2020 and is now about 20percent and 15per

227、cent higher,respectively.By the end of 2022,only Cambodia,Indonesia,lao PDR,Malaysia,and one Pacific Island country,Kiribati,had also exceeded pre-pandemic levels of output per capita.By the end of 2023,Mongolia,the Philippines,Thailand,and two more Pacific Island countries(Fiji and Tuvalu)are estim

228、ated to have exceeded pre-pandemic levels of output per capita.But output remains below pre-pandemic levels in the rest of the Pacific Island countries(PICs)as well as in Myanmar and Papua new Guinea(figureI.2).Source:World Economic outlook database,International Monetary Fund;United nations;World B

229、ank.FigureI.2.output per capita rose above pre-pandemic levels in 2023 in a majority of EAP economies,but declined further in some Pacific Island CountriesEvolution of GDP per capita compared to 20192520151050510152025ChinaViet NamMalaysiaIndonesiaCambodiaKiribatiPhilippinesLao PDRMongoliaTuvaluThai

230、landFijiTongaMicronesia,F.S.PNGMarshall Isl.Timor-LesteSamoaVanuatuMyanmarSolomon Isl.Palau2020202120222023PercentThe recovery has also been uneven across sectors.Information and communication technology and finance have experienced relatively strong growth.services sectors started to recover after

231、economic reopening in several of the regions economies,benefitting from the release of pent-up demand.However,output in transportation,accommodation and catering sectors in the Philippines and Thailand,and construction and real estate in Malaysia and the Philippines is still well below pre-pandemic

232、levels(figureI.3).Manufacturing recovered strongly in the aftermath of CovID-19 but has recently slowed down and its output is now below pre-pandemic levels in Thailand.Poverty rates in the region continue to decline(figure I.4).Chinas pace of poverty reduction picked up in 2023 after a relatively m

233、odest performance in 2022.This faster pace is expected to continue over the next years based on the upper-middle income 2EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIl 2024RECEnT DEvEloPMEnTspoverty line(Us$6.85/day,2017 PPP)although still at a slower pace than in the pre-pandemic years.Its poverty

234、 rate at the lower-middle income poverty line(Us$3.65/day,2017 PPP)reached a historic low in 2023,falling to less than 1 percent.In the rest of the region,the rate of poverty reduction will also pick up in 2023,averaging around a third of Chinas rate.overall,9 million people in the region are projec

235、ted to escape poverty between 2023 and 2024 based on the lower-middle income poverty line,whereas 34 million people are projected to escape poverty based on the upper-middle income poverty line.Despite the notable progress in poverty reduction,the fruits of economic progress are not always distribut

236、ed to households and pockets of extreme poverty remain in the region(box 1).Source:Haver Analytics.FigureI.3.Across sectors,ICT,finance and retail are growing rapidly,while tourism and real estate are still laggingGrowth of sectoral output(2019Q4=100)6070809010011012013014020202021202220232020202120

237、2220232020202120222023202020212022202320202021202220232020202120222023ChinaIndonesiaMalaysiaPhilippinesThailandViet NamAgricultureManufacturingWholesale&Retail tradeTransport,accommodation&cateringICT&financeReal estate&constructionIndexFigureI.4.Poverty rates are expected to decline furtherA.Lower

238、middle-income class poverty line($3.65 per day in 2017PPP)B.Upper middle-income class poverty line($6.85 per day in 2017PPP)Source:World Bank staffs estimation.Poverty estimates are based on growth forecasts,population projections,and historical growth elasticities of poverty.Note:Forecasts are base

239、d on GDP growth projections as of March 19,2024.3.02.01.31.10.80.60.516.516.015.814.913.712.611.70246810121416182019202020212022202320242025ChinaEAP excluding ChinaPercent of populationChinaEAP excluding ChinaPercent of population24.724.720.819.317.215.313.646.146.446.446.244.943.442.001020304050201

240、92020202120222023202420253FIRM FOUNDATIONS OF GROWTHRECEnT DEvEloPMEnTsBox1.The last mile in poverty reduction in the EAP region:The case of Papua New GuineaAlthough EAP countries have successfully reduced the population living in extreme poverty(with consumption above$2.15 per day,2017 PPP),signifi

241、cant pockets of extreme poverty remain in the region.Moreover,poverty is multi-dimensional and significant deprivations may persist despite improvements in household incomes.An analysis of the experience of Papua new Guinea(PnG)by Baxi et al.(2024)illustrates this.About 40 percent of the population

242、in PnG was living in extreme poverty in 2009,the latest official estimate available.This accounted for 10 percent of the total population in extreme poverty in the EAP region.There is evidence that despite PnGs significant economic growth,aided by a boost in external aid,extreme poverty remains stub

243、bornly high.Average annual per capita GDP growth in PnG was 3.3 between 2010 and 2017.Predictions of monetary poverty using household survey data from 20162018 suggest that monetary poverty barely changed during the period(figure B1.1;Baxi et al.2024).Moreover,a majority of the population lacks acce

244、ss to electricity and adequate water and sanitation services,and 20 percent live in a household in which no adults finished primary school.These indicators did not improve since 2009(figure B1.1).Economic growth in PnG is primarily driven by the extractive industries,which employ a small share of th

245、e population(UnFPA 2023).For the benefits of such growth to trickle down,it would have to spur economic activity in other sectors,and/or the gains need to be redistributed through public investment and transfers to the population.There is(continued)Figure B1.1.Extreme poverty(monetary and non-moneta

246、ry)has remained stubbornly high in Papua new GuineaSource:Baxi et al.(2024).PnGs Household Income and Expenditure survey(HIEs)2009,PnGs Demographic and Health surveys 201618,World Banks Poverty and Inequality Platform.Note:Estimates of share of population in extreme monetary poverty and without acce

247、ss to essential services.Whiskers represent 90-percent confidence intervals.Extreme monetary poverty is a prediction using several household socio-economic and demographic variables(household head education level,consumption of basic staples).The educational attainment indicator is measured as the s

248、hare of the population living in a household where no adults have finished primary school.A.GDP per capita growth of PNGB.Share of the population in PNG in extreme monetary poverty(predicted)and without access to basic servicesAverage4202468101220102011201220132014201520162017Percent2009 HIES201618

249、DHSPoorEducationalAttainment-HH AdultsPercent020406080100MonetaryPoverty(Predicted)ElectricitySanitationWater4EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIl 2024RECEnT DEvEloPMEnTs(Box 1.continued)evidence that neither has occurred sufficiently.studies suggest that a constraining business environme

250、nt and low human capital hinder spillovers and the prevalence of clientelism undermine the incentives to prioritize basic services(Pandey and Howes 2022;World Bank 2018,2023).Even the better-off population in PnG faces significant non-monetary deprivations(Baxi et al.2024).The need to focus on multi

251、ple dimensions of poverty is relevant for the EAP region more broadly.While extreme monetary poverty is low across the region,significant deprivations persist.In half of the countries in the region,at least 18 percent of the population still lack adequate access to sanitation,and in a quarter of cou

252、ntries,at least 40 percent of the population lack adequate access(figure B1.2).In a quarter of the countries,at least 20 percent lack adequate access to electricity.Figure B1.2.non-monetary measures suggest pockets of significant deprivation in the regionSources:2009 HIEs,201618 DHs,WDI,World Banks

253、2023 Macroeconomic and Poverty outlook.Notes:Data from the World Banks Poverty and Inequality Platform based on nationally representative Household surveys.The Figure depicts the median share of the population deprived across a sample of countries,and the 25th and 75th percentiles.The figures use th

254、e most recent(available)data from 20102022.The countries included are Fiji,Indonesia,Kiribati,lao PDR,Marshall Islands,Federated states of Micronesia,Mongolia,Myanmar,nauru,Philippines,samoa,solomon Islands,Thailand,Timor-leste,Tonga,Tuvalu,vanuatu,and viet nam.Share of the population in extreme mon

255、etary poverty,without access to basic services and with low educational attainment in EAP051015202530354045MonetaryPovertyPoorEducationalAttainment-HH AdultsElectricitySanitationWaterPercent5FIRM FOUNDATIONS OF GROWTHRECEnT DEvEloPMEnTsDeterminantsIn most major EAP economies,private consumption,boun

256、cing back from CovID-19 and inflation-induced austerity,sustained growth during 2023.Meanwhile,exports of both manufactured goods and commodities have contracted,while services exports have supported growth in Malaysia,the Philippines and Thailand(figureI.5).Public investment has supported growth in

257、 China,Indonesia and the Philippines,but private investment remains low in much of the region.Fiscal policy is now less expansionary in most countries.Source:Haver Analytics.Note:Chinas private consumption includes government consumption.Decomposition of goods export is estimated from nominal trade

258、statistics.FigureI.5.Private consumption has sustained growth in all the major countries;services exports have helped in Malaysia,the Philippines,and Thailand,and public investment in China,Indonesia and the Philippines;private investment and goods exports remain weakContribution to growth2015105051

259、01520252020 2021 2022 20232020 2021 2022 20232020 2021 2022 20232020 2021 2022 20232020 2021 2022 2023ChinaIndonesiaMalaysiaPhilippinesThailandPrivate consumptionGovernment consumptionPublic and private investmentServices exportsImportNet export(for China)Commodity exportsManufacturing exportsGDPPer

260、centage pointEconomic performance in the region is being shaped by external and domestic developments(figure I.6).The key external factors are recovering trade but an increase in trade protection combined with industrial policies,and still tight financial conditions.Among the domestic factors,the mo

261、st important are the amplified public and private debt,the constrained policy stance,especially fiscal and monetary,and increased political and policy uncertainty.External factorsFirst,global trade is recovering even though global GDP growth is slowing down.Trade in goods and services grew only by 0

262、.2 percent in 2023 but is projected to grow by 2.3 percent in 2024 even though GDP growth will slow down from 2.6 percent in 2023 to 2.4 percent in 2024(figure I.7).The projected recovery in trade is attributable to improved real incomes,as wage 7FIRM FOUNDATIONS OF GROWTHDETERMInAnTsSource:World Ba

263、nk staff illustration.FigureI.6.External and domestic factors affecting economic growthEAP countryeconomicperformanceExternal FactorsTrade distorting policyStill-tight financial conditionsIncreased indebtednessRecovering global tradeDomestic FactorsLimited macro policy spacePolicy uncertaintySource:

264、World Bank,Global Trade Alert,Haver Analytics,Fed watch.Note:B.figure shows the number of new harmful measures implemented by all WTo members,adjusted for reporting lag.FigureI.7.Three linked international developments will shape economic performance in the EAP countries:recovering global trade,incr

265、easing trade-distorting measures,and tight financial conditionsGDPTrade0246202220232024f2025fPercent10123456Jan-17Sep-17May-18Jan-19Sep-19May-20Jan-21Sep-21May-22Jan-23Sep-23May-24Jan-25Sep-25USEuro AreaPercentGoodsInvestmentServices05001,0001,5002,0002,5003,0003,500200920102011201220132014201520162

266、017201820192020202120222023Number of interventionsA.Global GDP and trade growthB.New trade-distorting measuresC.Interest ratesgrowth outpaces inflation,and demand shifts back towards more tradable goods from less tradable services.second,even though inflation has been declining in major economies,co

267、re inflation in the Us and EU remains elevated and labor markets remain tight,suggesting interest rates will remain higher than pre-pandemic levels in the in the foreseeable future.Third,almost 3,000 new trade-distorting measures were imposed in 2023,three times as large as those in 2019.Recent year

268、s have been marked by a surge in potentially trade-distortive industrial policy(IP)actions in many countries.The term“industrial policy”is broad,and it includes many types of different interventions targeting specific sectors(such as domestic subsidies,financial grants,tax-breaks).But these measures

269、 may have trade-distortive effects,for instance due to local content requirements that could hurt exports of developing EAP countries.The number of new protectionist measures taken by other countries affecting the regions economies has been increasing in recent years and so have the number of measur

270、es introduced by developing EAP economies(figure I.8;box 2).8EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIl 2024DETERMInAnTs0200400600800100012001400200920102011201220132014201520162017201820192020202120222023Measures affecting ChinaMeasures affecting EAP excluding ChinaNumber of interventions05010

271、0150200200920102011201220132014201520162017201820192020202120222023Measures implemented by ChinaMeasures implemented by EAP excluding ChinaNumber of interventionsFigureI.8.The number of new trade-distorting measures implemented against EAP countries have been rapidly increasing while those implement

272、ed by EAP countries have declined in recent yearsA.Number of newly-introduced trade measures affecting ChinaB.Number of newly-introduced trade measures affecting developing EAPexcluding ChinaSource:Global Trade Alert.Note:figures show the number of new harmful measures implemented,adjusted for repor

273、ting lag.Box2.EAP and potentially trade-distortive protectionist and industrial policiesThe new Industrial Policy observatory(nIPo),a new database released in January 2024(Evenett,Jakubik,Martn,Ruta,2024)allows a closer look at industrial policies during 2023.one important innovation in the nIPo,com

274、pared to the more comprehensive data from which it is derived(the Global Trade Alert),is that,in many instances,it also provides an estimate of the dollar amount pledged by the governments in a specific policy action.While the latter measure is imperfect(the dollars amount could refer to measures wi

275、th different time horizons),theres a strong positive correlation between the total spending planned on industrial policy and the numbers of measures implemented(Figure B2.1).Three facts emerge from a first look at the new data on industrial policy measures.First,the most active countries engaging in

276、 industrial policy are the countries of the G-20,such as the Us,China,India and most of the countries in the EU(figure B2.2).Industrial Policies:Expenditures vs Measures,2023Number of total measures(in logs)0246High IncomeEAPEMDEFitted valuesAUSAUTBELCANCZEDEUDNKESPFINFRAGBRGRCHKGHRVHUNIRLITAJPNKORN

277、LDNZLPOLPRTSAUSVKSVNSWEUSACHNTHAARGBOLBRAEGYINDMARMEXRUSTURZAF02468101214USD Millions(in logs)Figure B2.1.The number of industrial measures strongly correlates with the dollars spentSources:EAP Chief Economist office elaborations on data from nIPo and World Development Indicators.Note:new industrial

278、 policies,as defined by the nIPo,include both domestic industrial policies,as well as export promotion schemes and import trade barriers.All the potentially trade distortive measures are included.(continued)9FIRM FOUNDATIONS OF GROWTHDETERMInAnTssecond,the number of industrial policy measures implem

279、ented also correlates positively with the level of development,with the exceptions of Brazil,China,India,and Russia,which were more active in this space than predicted by their per capita GDP.lastly,the EAP countries(other than China and Indonesia)were less prone to implementing industrial policies

280、compared to other countries of similar size and level of development.In the appendix,we present a version of Figure B2.2 where we consider separately industrial policy measures,such as subsidies,and trade policy measures,such as import restrictions.Industrial policies represent two-thirds of total m

281、easures.In both cases,we find a positive correlation between the number of measures and the GDP per capita of countries.EAP countries are potentially exposed to the trade-distortive effects of such policies,for two reasons.First,Us,China,the Republic of Korea,and Japan are important destination mark

282、ets for developing EAP countries exports.second,firms receiving subsidies in large and developed nations are potential competitors of the EAP countries firms.An important aspect to consider for the EAP countries going forward,will be the interaction between the deployment of these policies by countr

283、ies who represent important or potentially important export markets,and the development new preferential trade agreements,or the progressive implementation of existing ones(such as the RCEP).AUSAUTBELCANCHECZEDEUDNKESPFINFRAGBRGRCHKGHRVHUNIRLITAJPNKORNLDNZLPOLPRTSAUSGPSVKSVNSWEUSACHNIDNMYSTHAVNMARGB

284、GDBOLBRAEGYINDMEXNPLPAKRUSTURUKRZAF0123456AUSAUTBELCANCHECZEDEUDNKESPFINFRAGBRGRCHKGHRVHUNIRLITAJPNKORNLDNZLPOLPRTSAUSGPSVKSVNSWEUSACHNIDNMYSTHAVNMARGBGDBOLBRAEGYINDMEXNPLPAKRUSTURUKRZAF0123456Industrial Policies:Measures vs.Country Size,2023Number of total measures2023-(in logs)Population in 2021(i

285、n logs)1416182220High IncomeEAPEMDEFitted valuesIndustrial Policies:Measures vs.Development,2023GDP per Capita in 2021(in logs)89101211High IncomeEAPEMDEFitted valuesNumber of total measures2023-(in logs)Figure B2.2.The rich and large are the prime practitioners of industrial policySources:EAP Chief

286、 Economist office elaborations on data from nIPo and World Development Indicators.Note:new industrial policies,as defined by the nIPo,include both domestic industrial policies,as well as export promotion schemes and import trade barriers.All the potentially trade distortive measures are included.A.P

287、rotectionist measures and populationB.Protectionist measures and income per capita(Box 2.continued)10DETERMInAnTsDomestic factors DebtDebt as a share of GDP increased over the last decade in most EAP countries.General government debt as a share of GDP is much higher today in most of the regions econ

288、omies(figure I.9)following the easier financial conditions after the global financial crisis and increased budget deficits during the pandemic.High government debt limits fiscal space,constraining public investment,and may also hinder private investment by raising interest rates.Private debt has als

289、o surged in major economies.Corporate debt as a share of GDP has increased in China and viet nam by more than 40 percentage points since 2010,and now exceeds the levels in advanced economies.High corporate debt may hurt private investment by leaving firms with less resources for new projects.Househo

290、ld debt too is now significantly higher in China,Malaysia and Thailand compared to levels in other emerging markets,and that is squeezing consumption.C.Nonfinancial corporate debt201020192023201020192023201020192023MalaysiaThailandPhilippinesChinaMongoliaThailandIndonesiaViet NamAEOther EMDEPercent

291、of GDPPercent of GDPPercent of GDPMalaysiaChinaViet NamMongoliaIndonesiaPhilippinesLao PDRAEOther EMDE04080120160200ChinaViet NamMalaysiaThailandMongoliaPhilippinesIndonesiaLao PDRAEOther EMDELao PDR04080120020406080100FigureI.9.Public and private debt has significantly increased over the last decad

292、eA.Government debtB.Household debtSource:Institute of International Finance,World Bank staff estimates.In 2023,interest payments on external debt increased significantly in most countries in the region.Highly indebted countries such as lao PDR have experienced a larger increase in interest payments,

293、especially on private debt on which interest rates are more likely to follow the market rate(figure I.10).In lao PDR,which has been assessed to be in debt distress,interest payments to China(approximately 165 million UsD or 1.1 percent of GDP)were deferred in 2023.While the deferral provides tempora

294、ry relief,the repayment profile remains uncertain and subject to the conclusion of debt negotiations.The increase in interest payments limits fiscal space and can constrain public and private investment.Higher nominal interest rates,contained inflation,and lower growth rates are likely to add to pub

295、lic debt to GDP ratio faster than in the past.The result would be an increase in the contribution of interest payments to debt-to-GDP(the interest payment burden is significant in Indonesia,Percent of GDP012345672018222023201822202320182220232018222023201822202320182220232018222023201822202320182220

296、23MNGLAOFJIKHMIDNTHAVNMPHLCHNPublicPrivateSource:International Debt statistics,World Bank staff estimatesNote:Data is according to the original repayment plan and could include deferred debt such as in lao PDR.FigureI.10.Interest payment on external debt has significantly increased in 2023 in most c

297、ountriesInterest payment on long-term external debt as a share of GDP11FIRM FOUNDATIONS OF GROWTHDETERMInAnTslao PDR,Papua new Guinea,and Mongolia)and smaller reductions in debt-to-GDP ratios due to growth.Macroeconomic policyThe macroeconomic policy stance has turned contractionary after the expans

298、ionary stance in the 20202022 period in most economies.As the CovID-19 situation stabilized and governments grappled with increased indebtedness,expenditure on support programs that were implemented during the pandemic declined.This reduction in support is leading to a decline in disposable income f

299、or households and firms,which could potentially dampen consumption and investment.The major economies in the region are projected to have a positive or neutral structural balance in the 202324 period compared to previous years(figureI.11).Policy interest rates have been raised both globally and in t

300、he EAP region to address the threat of inflation.Policy rates in many EAP countries,however,remained lower than in other emerging market and developing economies(EMDEs),and the rise in policy rates has been milder.This is because the EAP region has generally been less affected by inflationary pressu

301、res than other regions.Central banks in the region have also utilized other monetary policy measures such as adjusting reserve requirement rates and conducting open market operations.Due to weak domestic demand and distressed corporate sectors,rates have recently been decreased in China and viet nam

302、(figureI.12).Inflation had been declining across the EAP region,in response to lower commodity prices,easing supply constraints and decelerating domestic demand(figureI.13).However,inflation has remained stubbornly high across the Pacific Island Countries,as well as in Mongolia,lao PDR and Myanmar,r

303、eflecting the raising prices of some commodities like rice,high dependence on imports,and/or rapid depreciation of currencies.Countries such as Thailand,China and Cambodia are now experiencing negative inflation.While deflationary pressures partly reflect relatively weak domestic demand,there is a r

304、isk that they could be transmitted to other economies in the region.For instance,as China continues to play a significant role in global trade and manufacturing,changes in producer costs in China can feed through to price inflation in other EAP countries.Indeed,there seem to be strong co-movements b

305、etween Chinas producer prices and both PPI and CPI inflations in other EAP economies,with an approximately two-quarter lag(figure I.14).Percent of GDP21012ThailandMalaysiaPhilippinesIndonesiaChina202022202324FigureI.11.Fiscal policy has become less expansionary in most countriesChange in structural

306、balanceSource:World Economic outlook Database,october 2023,International Monetary Fund.01234567Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23Jan-24ChinaIndonesiaMalaysiaPhilippinesThailandViet NamPercentFigure12.Monetary policy has tightened in the region,except in China and viet namPolicy rateSou

307、rce:Haver Analytics.12EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIl 2024DETERMInAnTsPercent10505101520Dec-21Mar-22Jun-22Sep-22Dec-22Mar-23Jun-23Sep-23Dec-23CPICore CPIPPIExport PriceImport PriceCPICore CPITargetPercent5051015202530LowModerateHighChinaCambodiaMalaysiaIndonesiaPhilippinesViet NamFij

308、iMongoliaLao PDRMyanmarThailand0.70.30.11.52.83.43.94.67.025.428.60.41.00.81.73.42.8FigureI.13.CPI inflation is declining;some countries face deflationary pressuresA.Various indicators of inflationB.Latest Consumer Price Inflation and targetSource:Haver Analytics.Note:A.simple average of China and A

309、sEAn-5 countries.B.latest available year on year change,seasonally adjusted.Target refers to Central Bank target for each country(forecast in Malaysia).84048122010q42011q32012q22013q12013q42014q32015q22016q12016q42017q32018q22019q12019q42020q32021q22022q12022q42023q3Chinas PPI inflationPPI inflation

310、:EAP average,excluding China(RHS)2010q10123456782010q42010q12011q32012q22013q12013q42014q32015q22016q12016q42017q32018q22019q12019q42020q32021q22022q12022q42023q3Chinas PPI inflationCPI inflation:EAP average,excluding China(RHS)8404812FigureI.14.Co-movements between Chinas producer prices and EAPs p

311、roducer and consumer pricesA.Chinas PPI and EAPs PPIB.Chinas PPI and EAPs CPISource:Haver Analytics.Notes:EAP averages of quarterly PPIs and CPIs of Indonesia,Malaysia,Philippines,Thailand,and viet nam.Monetary policy in the region appears to be balancing the need for monetary policy support and ris

312、ks of continuing inflation.specifically,policymakers in the EAP region have kept interest rates higher than before the pandemic to tackle inflationary pressures from still-high commodity prices and prevent capital outflows caused by interest rate differentials between advanced economies.When the Us

313、Federal Reserve started to tighten monetary policy,China,Indonesia,and Malaysia experienced capital outflows.Pressures had eased by the end of 2022 in Indonesia and Malaysia,but outflows 13FIRM FOUNDATIONS OF GROWTHDETERMInAnTs Political and policy uncertaintyThe economic policy uncertainty index in

314、 the region has increased in recent years(figure I.16).Political instability as well as rising geopolitical tensions can also fuel uncertainty.Uncertainty refers to the lack of predictability or clarity about future economic conditions,such as changes in government policies,market conditions,or geop

315、olitical events.High levels of uncertainty have a negative impact on investment growth,as investors choose to“wait and see,”instead of investing in new projects or expanding their existing businesses.Tracing the impact of external and domestic factorsA growth shock originating in the regions largest

316、 trading partners,China and the Us,would impact EAP economies through bilateral trade and financial flows,including foreign continued in China amid weakening investor confidence(figure I.15).By the end of 2023,equity and bond outflows from China amounted to more than one percent of GDP.Currencies de

317、preciated in all major economies but were especially severe in countries at or with a high risk of debt distress such as in lao PDR.1.51.00.50.00.51.01.5Feb-22May-22Aug-22Nov-22Feb-23May-23Aug-23Nov-23Feb-24ChinaIndonesiaMalaysiaPhilippinesThailandPercent of GDP50751001258090100110Feb-22Apr-22Jun-22

318、Aug-22Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23Oct-23Dec-23Feb-24ChinaIndonesiaMalaysiaPhilippinesThailandViet NamMongoliaLao PDR(RHS)Index,Feb 2022=100FigureI.15.Major capital outflows from China while currencies are weakening in all economiesA.Portfolio capital flows(cumulative since Feb 2022)B.Nominal

319、 exchange rates(USD/local currency)Source:Haver Analytics.Note:B.7-day moving average.IndexIndex00.10.20.30.40.50.6010020030040050060070020152017201920212023ChinaGlobalOther EAP(rhs)Omicron wave&war in Ukraine COVIDAlpha waveFigureI.16.Economic policy uncertainty has increased in recent years in EAP

320、Source:World Uncertainty Index;Economic Policy Uncertainty Index.Note:“China”shows Economic Policy Uncertainty index based on south China Morning Post and mainland China newspapers.“other EAP”shows median of Indonesia,Malaysia,Thailand,Philippines and viet nam using World Uncertainty Indexs 4-quarte

321、r moving average.“Global”shows global Economy Policy Uncertainty index.3-quarter moving average.Uncertainty index14EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIl 2024DETERMInAnTsdirect investment(FDI)(as discussed at length in World Bank 2023a).Changes in growth in the Us or China could also impact

322、 regional economies by affecting confidence and hence domestic consumption and investment.An unexpected one-off decline in Us(Chinas)GDP growth rate of 1 percentage point would decrease growth rate in the other developing EAP countries,on average,by an estimated 0.5(0.3)percentage points in the next

323、 year(figure I.17).Unanticipated shocks to Us monetary policy also affect growth;a 25 basis points increase lowers growth by an estimated 0.5 percentage points.Additionally,uncertainty shocks in the Us and China can adversely impact macro and financial conditions in EAP countries.A one standard devi

324、ation increase in Us macro uncertainty is associated with a 0.5 percentage point decline in output growth and a 3 percent drop in asset prices in EAP within one year(Figure I.18;Box A1).The effects are comparable to a one standard deviation decline in Us output.Further,while China is itself negative

325、ly impacted by the global and Us uncertainty,its own uncertainty shocks are negatively associated with macroeconomic and financial conditions in EAP.A one standard deviation increase in macro uncertainty in China,is associated with 0.3 percentage points decline in industrial production in EAP countr

326、iesaround half of the responses to the same type of Us uncertainty.similarly,Chinas heightened policy uncertainty was followed by stock price declines and heightened uncertainty in EAP countries.These results suggest that China is both a recipient and a source of uncertainty shocks in the global mar

327、kets,particularly for EAP economies.ConsumptionHigh-frequency proxies of domestic demand show a slow revival of consumer spending.Both retail sales and imports are higher than they were before the pandemic(figureI.19).Recent data suggest a bottoming out of consumer spending,even though its pace of g

328、rowth remains slow.While domestic demand will continue to support economic growth,it continues to be negatively affected by high uncertainty and increased financing costs.Consumer confidence remains low in China and at or below pre-pandemic levels in the rest of the region.Source:World Bank staffs e

329、stimations.Notes:Bar show impact of the following shocks:one percentage point decrease in China and Us growth,and 25 bps increase in Us 2-year interest rate yield.Effects estimated using a structural Bayesian vAR model that includes the following variables:Us monetary policy reaction shock,U.s real

330、GDP growth,China real GDP growth,commodity weighted prices for recipient country,recipient country real GDP growth,and recipient country exchange rate to the Us dollar.EAP countries included in the estimation are Indonesia,Malaysia,the Philippines,and Thailand.The models are estimated from 2000Q1 to

331、 2022Q4,except in Malaysia which starts in 2005Q1.The Us monetary policy shock is based on Arteta,Kamin,and Ruch(2022)and captures changes in investors assessments that the Federal Reserves reaction function has become more hawkish.1.20.80.40.0US GDPChina GDPUS monetarypolicyPercentage pointFigure I

332、.17.Growth in the region is influenced by development in the regions largest trading partnersImpact of 1 pp decrease in China and US GDP growth,and 25 bps increase in US 2-year yieldSource:World Bank staffs estimations.Notes:Bars show dynamic responses of EAP productions to a one-standard-deviation

333、increase in macroeconomic uncertainty in the U.s.and China.The results are based on a panel vector autoregressions for Indonesia,Malaysia,Philippines and Thailand.The model includes,in this order,the Us production,Us CPI,Us uncertainty,China production,CPI,uncertainty measure,and domestic(EAP)industrial production,prices,stock prices,exchange rates,and uncertainty measures.Impact of 1 std uncertai

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