Foreword

Acknowledgements

Executive summary

I.

Fastest growth in the world – 7.9% in 2006

Successfully fighting inflation

Living with high oil prices

Pressure on currencies to appreciate 

Record level of foreign reserves

Strong exports – but high oil prices take a toll on current accounts

Getting the best out of bilateral and regional trade agreements

Outlook for 2007 – continuing dynamism amid rising risks

Inflation – less of a problem

Managing exchange rates – the biggest challenge in 2007

Current account surpluses – to deteriorate slightly

Downside risks not to be ignored

Key economic issues on the watch list

Monitoring vulnerability to currency crises

Boosting domestic demand through private investment, especially in East Asia

Reaping the one-off demographic dividend

Managing urban growth

Promoting green growth to sustain development 

Appendix 1: Composite index of vulnerability to currency crisis – concept and measurement 

References

II.

Subregional performance, challenges and policies

Widespread growth across Asia and the Pacific

East and North-East Asia – external demand boosts growth

Excess liquidity keeps the heat on

Current accounts remain in surplus

Weaker global demand poses a risk for medium-term prospects

Policy research feature 2.1: China’s wake-up call to exporters in the Asia-Pacific region

North and Central Asia – oil and gas fuel spectacular growth

High and rising inflation widespread 

Current account surpluses for oil exporters – workers’ remittances boost external revenues for others

Foreign direct investment flows in

Foreign debt burden eases

Medium-term prospects are strong

Pacific island countries – robust growth, continuing challenges

External sector set to gain from the partnership with the European Union

Impact of higher oil prices

Policy research feature 2.2: The challenge of urbanization

South and South-West Asia – growth momentum sustained

Least developed countries forge ahead

High oil prices sustained inflationary pressures

Budget deficit – a serious problem in several countries

Current account deficits widen due to high oil prices

Outlook for 2007 – growth expected to remain strong

Policy research feature 2.3: Electricity and roads to reduce rural poverty

South-East Asia – growth accelerates on the back of strong exports

Higher oil prices – a catalyst for rethinking monetary policy

External sector helped by strong global economy

Medium-term prospects – dependence on global demand raises concerns

Policy research feature 2.4: Developing East Asian corporate bond markets 10 years after the crisis

Developed countries – modest growth but Japan’s revival bodes well for the Asia-Pacific region

Policy research feature 2.5: Are inequality and poverty rising in Japan?

References

III.

Gender inequality continues – at great cost

Economic and social costs of gender discrimination

Cost of restrictions on labour force participation – $42-$47 billion a year

Cost of gender gaps in education – $16-$30 billion a year

Cost of restrictions on access to health services

Social costs of gender discrimination

Progress towards narrowing the gender gap

Economic participation – women’s autonomy is the key to success

Educational attainment – a large gap, greater effort required

Health and survival – the gender gap exacerbated

Voice and empowerment – a wider gap

Eliminating gender discrimination – policy recommendations

Improve access to education

Improve access to health care

Enhance economic participation of women

Enhance access to material resources

Take steps to empower women by facilitating social mobilization

Hear the voice of women

References

Statistical annex

Boxes

I.1

The growing impact of the Asia-Pacific region on the world economy

I.2

Reducing oil dependency – country experiences

I.3

Making the Doha Development Round a success

I.4

Why the falling share of consumption in China? Precautionary savings could be the main reason

I.5

India – less reliant than many others on exports for growth

I.6

Pro-poor green business: Lekhani Paper and Power Project in Nepal

II.1

Sri Lanka takes the initiative in textiles and apparel

II.2

Is there evidence of “Dutch disease” in North and Central Asia?

II.3

The impossible trinity and the monetary regime in South-East Asia

II.4

Asia-Pacific economies set to benefit from Japan’s revival

III.1

The cost of the gender gap in education – empirical evidence

III.2

Closing the gender gap in the Philippines

III.3

Avoiding the penalties of gender inequality

III.4

Reducing maternal mortality in Bangladesh

III.5

Empowering women through microcredit

III.6

A quota system for women’s representation in local government: The experience of South Asian countries

Tables

I.1

Rates of economic growth and inflation of selected economies in the ESCAP region, 2005-2007

I.2

Impact of a 10% increase in oil prices on selected Asian economies

I.3

Ratio of foreign exchange reserves to short-term external debt in selected Asia-Pacific countries, 2005 and 2006

Current account balances of selected developing economies and North and Central Asian economies, 2003-2006

Comparison of the trade agreements in Asia and the Pacific with the good practice model

Summary of external accounts for selected East and North-East Asian economies, 2005-2006

Countries face competition from China in third-country markets: Export competition with China in country markets in 2005 and world market share change, 2001-2005

Potential and direct export competition with China, 2001-2005

Intermediate goods are the main export of middle-income Asia-Pacific economies to China: China’s imports by stages of production from selected countries, 2000 and 2005

... and distinctly outweigh China’s exports of intermediate products to these countries: China’s exports by stages of production to selected countries, 2000 and 2005

Low-income countries depend on unskilled labour-intensive exports: Export structure by relative factor intensities in selected economies, 2000 and 2004

Summary of external accounts for North and Central Asian economies, 2005-2006

Summary of external accounts for selected Pacific island economies, 2005-2006

Summary of external accounts for selected South and South-West Asian economies, 2005-2006

Summary of external accounts for selected South-East Asian economies, 2005-2006

Electronics production in selected South-East Asian economies, 2002-2005

Cumulative net portfolio flows in East Asia, 2001-2005

Current accounts improve

Impact of gender equality in labour force participation, 2000-2004

Economic gains from better gender balance in education in the region

Figures

Real GDP growth rising in developing ESCAP economies, 1997-2006

Inflation in the ESCAP region, 2005 and 2006

Nominal and real oil prices rose to record highs in 2006

Declining impact of rising oil prices on growth and inflation

Trends in oil intensity in production for selected countries in the Asia-Pacific region

Less movement in real effective exchange rates compared to nominal rates, 2005-2006

Unprecedented level of foreign reserves in the developing ESCAP region, 2005 and 2006

Real GDP growth forecast for selected developing economies in the ESCAP region

Consumer price inflation largely under control

Current account balances of selected developing economies in the ESCAP region, 2006 and 2007

Vulnerability in crisis-affected countries

Vulnerability in other emerging economies

Declining private investments and increasing reliance on exports

Percentage differences between the recent shares of disaggregate demand and its long-term trend

Construction and machinery and equipment investment in selected East Asian economies, 1990-2005

Demographic dividend – percentage of the population aged between 15-64 in ESCAP subregions

Rates of growth of real GDP in the ESCAP region, 2005-2006

The move away from agriculture to industry and services

Savings continue to outpace investment

Credit growth is a concern in China and the Republic of Korea

Booming housing prices in the Republic of Korea

Index of exchange rates against the United States dollar of selected East and North-East Asian economies, 1996-2006

High and middle-income economies have substantial opportunities to export to China: Trade complementarity of selected economies with China, 1996-2005

Azerbaijan leads the pack

Inflation – generally high and rising

Oil and gas revenues pushed some currencies higher against the dollar

Real GDP and sectoral growth in selected Pacific island economies, 2004-2006

Moving to towns and cities

Industry and services perform well: Economic growth rates and sectoral contributions in selected South and South-West Asian countries, 2005-2006

Investment higher than savings, except in the Islamic Republic of Iran, 2006

Inflation and money supply growth (M2) in selected South and South-West Asian economies, 2003-2006

Budget balance as a per cent of GDP in selected South and South-West Asian countries, 2004-2006

Industry and services drive growth: Rates of economic growth and their sectoral contributions in selected South-East Asian countries, 2005-2006

Lagging investment in middle-income South-East Asian economies, 2006

By the end of 2006 currencies regained strength

Ratio of non-government debt to GDP increasing

Ratio of non-government debt to investment rising over time

Ratio of private domestic bonds on issue relative to bank credit

Raw bid-ask spreads on corporate bonds – most markets less liquid

Shadow bid-ask spread on corporate bonds – Singapore and Hong Kong, China more liquid

Areas where reform is most critical – the degree of policy success

Economic growth picks up in Japan

The share of non-regular workers

Annual income of regular workers

Annual income of part-time workers

Share of wages and salaries and employers’ social contribution in national income

Share of beneficiaries of social assistance

Female labour force participation in selected countries, 1990-2004

The gender gap index, 2006

Gender gap indices of selected countries

Comparison between male and female labour force participation rates in Asia and the Pacific

Schooling, literacy and agricultural employment

Share of women working outside of agriculture, by subregion

Impact of women’s education on health

Gender gap in secondary education, latest year available between 1990 and 2000

Total fertility rate, 2004

GNI per capita and total fertility rate of countries in the ESCAP region, 1990-2004

Maternal mortality, by subregion

Maternal mortality rates

Infant mortality, by subregion

Infant mortality rates

Male and female life expectancy in the Asia-Pacific region, 2004

III.16

Female to male ratio in the population, 2005

III.17

Women in parliament in selected Asia-Pacific countries, 2004