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Developing Asia grew at 5.8 per cent in 1991.

The only South Asian countries that experienced increased growth were Bhutan, Nepal and Pakistan. In these countries, conditions in agriculture were favourable. In Nepal the economic climate improved with the onet of democracy and the adverse impact of the Gulf War on the fiscal and current account balances was limited. As a result, Nepal's growth rate rose to 4 per cent in 1991 from 3.6 per cent in 1990.

Developing Asia posted aggregate gross domestic product (GDP) growth of 5.8 per cent in 1991 against the background of one of the poorest blobal economci performances since the Second World War, according to the 1991 Annual Report of the Asian Development Bank. According to the Report, the Bank's developing member countries (DMCs), as a whole, experienced a slowdown but still remained the fastest-growing region in the world.

The Report attributed the slowdown to recession in North America and the United Kingdom and a sharp decline in output in the former Soviet Union and Eastern Europe as well as the adverse effects of the Gulf War. The recession had not however, been as widespread as had been feared, noted the Report, which also predicted a modest upturn in 1992. "The Bank's DMCs experienced a wider variation in growth performance in 1991. The range was from very high growth rates in the people's Republic of China, Republic of Korea and Malaysia to no growth or contradiction in Mongolia Philippines, "the Report said.

Growth in the newly industrializing economies (NIEs) and in the People's Republic of China was led largely by exports and economic expansion in Southeast and South Asia was driven by buoyant domestic demand and investment in manufacturing, construction infrastructure. The Report, howevedr, cited structural adjustment, weak fiscal positions and a shortage of foreign exchange as reasons for the generally slower growth experienced in South Asia.

Noting exceptions, the Report said, "A sharp contraction in output was recorded for Mongolia as a consequence of its radical transformation, while the Philippines experienced negative growth as a series of natural disasters exacerbated the economy's structural weakness and debt overhang." The Report recorded the economic performances of the Bank's DMCs during 1991 as follows:- [right arrow] Newly Industrializing Economies: The NIEs as a group grew by 7.3 per cent in 1991 again st 6.8 per cent the previous year. The Republic of Korea logged the fastest rate 8.3 per cent, although this was lower than the year earlier. The Republic of Korea benefited from stronger domestic demand - particularly plant expansion, government investment in infrastructure and housing construction.

Hong Kong and Taipei China recovered somewhat in 1991 with the former recording a growth rate of 4 percent (against 2.8 per cent in 1990) and the latter 7.3 per cent (against 4.9 per cent). On the other hand, Singapore's growth slowed to 7 per cent in 1991 from 83 per cent in 1990. Singapore was affected by a tight labour market, slower economic growth in neighbouring coutries and recession in the US. [right arrow] Southeast Asia: Economic growth continued to decelerate in Southeast Asia, slipping to just below 6 per cent in 1991 from over 7 per cent the previous year. Unlike in 1990, the deceleration was pervasive, involving all countries in this region. The slowdown was due to capacity constraints infrastructure bottlenecks and tight monetary and fiscal policies as well as soft imort demand in the industrialized countries. * In Indonesia, the slowdown was caused by a tight monetary policy that dampened investments. Indonesia's growth rate fell to 6.4 per cent in 1991 from 7.4 per cent in 1990. After posting a record growth of close to 10 per cent in 1990, the Malaysian economy slowed to 8.6 per cent in 1991. * Thailand's growth also slowed as constraints on capacity and infrastructure became more binding. GDP growth slipped to 7.5 per cent in 1991 from about 10 per cent in the previous year. * In the Philippines, the economy contracted by 1 per cent because of structural weaknesses compounded by unfavourable exogenous factors. The recession in construction activity and durable equipment ivestment was specially dramatic owing to a slump in demand and bottlenecks in supply.

GDP growth fell by more tha a third in Lao PDR to 4 per cent reflecting a drastic reduction in agricultural output due to drought and floods during the main growing season. Vietnam's economy grew by 3.8 per cent. The services sector was the main source of growth, with non-material services expanding by 9 per cent. Agricultural production remained unchanged while industrial output expanded by close to 5 per cent. [right arrow] South Asia: South Asia's performance continued to be mixed. Aggregate GDP for the subregion grew by 2.7 percent lower than 5.5 percent growth the previous year. * Bangladesh's 3.3 per cent GDP growth was a substantial decline from 6.6 per cent in 1990. As a result of a severe cyclone that hit the coastal areas, agricultural growth fell to 1.3 per cent in 1991 from 10 per cent in 1990. Industrial growth also slowed to 2.6 per cent from 6.3 per cent over the same period. * In Sir Lanka, agriculture grew by less than 1 per cent in 1991 compared with about 9 per cent in 1990 and this helped reduced the overall GDP growth to 5 per cent in 1991 from 6 per cent in 1990. * India's economic growth declined to 2 per cent in 1991 from 5.6 per cent in 1990. Agricultural growth remained at 4 per cent. Industry and services slipped sharply and exports contracted by 2.3 per cent in 1991 after growing by 15 per cent in 1990. Myanmar's growth rate slipped to 3.7 per cent in 1991 from 4 per cent in 1990. In Maldives where economic growth is largely a function of fishing and tourism, the Gulf War hit tourist arrivals, resulting in a growth rate substantially lower than that achieved in recent years.

The only South Asian countries that experienced increased growth were Bhutan, Nepal and Pakistan. In these countries, conditions in agriculture were favourable. In Nepal, the economic climate improved with the onset of democracy and the adverse impact of the Gulf War on the fiscal and current account balances was limited. As a result, Nepal's growth rate rose to 4 per cent in 1991 from 3.6 per cent in 1990.

In Pakistan, GDP grew by 6.5 per cent, an improvement over the 5.3 per cent the previous year. This was mainly due to a vigorous performance in agriculture, which accounted for one-fourth of total production. Besides favourable weather, other factors behind the sector's strong growth were improved irrigation, greater use of high quality seeds, better procurement prices and increased disbursement of agricultural credit. [right arrow] Pacific Island DMCs: Papua New Guinea's economy rebounded to a record growth rate of 9.3 per cent after two years of recession. Industrial output grew 25 per cent as gold production increased substantially from newly commissioned mines. In Tonga, GDP growth improved to 3.9 per cent in 1991 from 2.8 per cent the previous year, primarily because of higher agricultural production and exports. Fiji, following two years of strong growth, expanded by only 0.4 per cent in 1991 against 5.4 per cent in 1990. While industry performed modestly, the services sector declined by 0.9 per cent compared with an increase of 8.3 per cent a year earlier.

Solomon Islands' growth narrowed to 3.7 per cent in 1991 from 4.2 per cent in 1990 as a result of a slowdown in the industrial and service sectors. In Western Samoa the economy shrank by 1 per cent largely as a result of extensive cyclone damage. The slowdown in other Pacific Island DMCs reflected the generally poor performance of the primary sector due to unfavourable weather.

PRC and Mongolia: PRC's economy grew by 7 per cent in 1991. A strong rebound in industrial output and continued buoyancy in external trade contributed to this achievement. However, inflation again becaem a concern and the problem of low public sector efficiency remained unsolved. Mongolia, which has undertaken bold and comprehensive reforms to transform its economy, recorded an estimated 18 per cent slide in 1991 after a 2 per cent decline in 1990. The industrial sector was the most severely hit with output falling by 30 per cent.
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Title Annotation:Asian Development Bank report
Publication:Economic Review
Date:Jul 1, 1992
Words:1408
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