The Launch of UN Economic and Social Survey of Asia and the Pacific 2012
was held in Beijing, China, with the participation of distinguished participants from academia, government, civil society, international organizations, and the press. Dr. Amitava Mukherjee, Senior Expert of Macro Economic Policy Development Division, United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), Mr. Leroy Hollenbeck, Head of APCAEM, United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and Professor HUANG Yanfen, School of Public Administration, Renmin University of China made opening remarks, presentations and commenting on the publication.
The Asia-Pacific region continues to face a deeply challenging external environment. The V-shaped recovery from the depths of the 2008-09 global financial crisis in 2010 proved to be short-lived, as the world economy entered a second stage of the crisis in 2011, continued uncertain economic outlook of the US economy and due to the Eurozone debt crisis. Notwithstanding this slowdown, growth in Asia and the Pacific remains substantially better than in any other region ¨C continuing as an anchor of stability and growth pole for the world economy.
The 2012 edition of the Economic and Social Survey of Asia and the Pacific: Pursuing Shared Prosperity in an Era of Turbulence and High Commodity Prices, analyses the short and medium-term challenges for the region and the outlook for the year ahead. A persistent concern for the region highlighted in the Survey is the challenge presented by commodity price volatility, in particular the trend of rising commodity prices. High prices and persistent volatility are likely to become the ¡®new normal¡¯ of the global economy. This commodity boom presents risks and opportunities for both commodity exporters and importers in the region.
The flagship publication of the Economic and Social Commission for Asia and the Pacific (ESCAP
) ¨C the regional arm of the United Nations ¨C provides policy options for governments to overcome these challenges and maintain the pursuit of inclusive and sustainable development in Asia and the Pacific.
Strong economic growth amid growing uncertainty
• In 2011, the economy of China expanded by 9.2% despite sluggish growth in the European Union, United States and Japan . The main contributors to China 's GDP growth were private consumption and investment, while the export sector's share as a percentage of GDP continued on a decreasing path.
• Reflecting broad-based weakening in demand from developed countries in Europe and the United States , growth of exports moderated significantly in the second half of 2011. Imports also decreased but to a lesser degree indicating that imported goods are increasingly being consumed domestically rather than processed for export.
• The rise in domestic consumption is viewed favourably in light of the need to rebalance growth. Reflecting the rise in household income levels, on the external sector the services deficit increased in 2011 due to a large increase in out-bound travel. These factors together contributed to the fall in the current account surplus to 3% of GDP in 2011 from 5.2% of GDP in 2010.
• Government efforts to slow the rise in real estate prices led to the stabilization of property markets. By the end of 2011, some 25.1% of total investment went into real estate development but sales rose only by 5%.
• In 2012, China 's economic growth is forecast to slow to around 8.6% as global economic uncertainty rises. Lower growth projections also take into consideration the Chinese government plans to move away from emphasizing quantitative GDP growth to improving the quality of growth, in accordance to the 12 th Five-Year Plan.
Easing inflationary pressures but risk remains
• Persistently high inflation throughout 2011 posed a major challenge for policymakers. The price of staple food such as pork rose at a much faster rate than the headline inflation, leading the People's Bank of China to raise interest rates five times in 2011. The benchmark rates increased from 5.81% at the beginning of the year to 6.56%. Additionally, reserve requirement ratios were increased nine times during the year to absorb excess liquidity and cool down property markets.
• Since reaching a peak in July 2011, inflationary pressures eased somewhat as a result of deteriorating economic conditions in Europe and the United States .
• Looking ahead, monetary policy is unlikely to be loosened despite slower economic growth as the government's primary focus is to contain inflation and protect low-income families from the impact of rising prices. For 2012, consumer prices are forecast to rise by around 4.0%, down from 5.4% recorded in 2011.
Currency appreciates against dollar and China 's FDI to other countries grows
• The Chinese renminbi appreciated by approximately 6% against the dollar in the period between June 2010 and August 2011. This trend is expected to continue in 2012 given that the Government of China plans to reform the foreign exchange rate regime to increase the flexibility of the renminbi.
• Capital outflow from China continued to accelerate in 2011. China 's outward FDI is a growing source of capital for neighbouring countries in the Asia-Pacific region, as well as other developing regions in Africa and Latin America .
Budget deficit kept at relatively low levels but growing concern over rising local government debt
• By end of 2011, the government budget deficit was at around 2% of GDP, slightly higher than the 1.7% recorded in 2010.
• The government announced plans to reform the income tax system to improve growing income disparity and increase government expenditure on social security measures, education and healthcare. While the national government's budget deficit is kept at a relatively low level, there is growing concern over the fiscal situation of local governments.
Emerging socioeconomic challenges
• The Government of China has been steering the economy towards a soft landing in order to combat upward pressure on prices. At the same time, the increasingly uncertain external economic conditions mean that the Government needs to continue to focus policy on rebalancing growth in support of domestic consumption. However, rising inequality and the concentration of wealth at the top, works against these efforts by limiting the purchasing power of a large number of lower income groups.
• It is widely accepted that one of the drivers of growing inequality in China is the persistent income gap between rural and urban areas. However, an equally significant factor is the unequal access to education, healthcare and other social infrastructure that allows for upward mobility.
• Recognizing that inequality is a critical issue for stability and prosperity of the Chinese economy, the government has stepped up efforts to improve distribution. While tools for income redistribution including tax reform, social security benefits and other safety nets are an important part of narrowing the gap between the rich and poor, a more fundamental cure lies in creating decent jobs in urban areas and supporting income growth in rural areas through research and development, training and innovation.
For more information, please contact:
Ms. Francyne Harrigan
Chief, Strategic Communications and Advocacy Section, ESCAP
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