1. The Recovery in Developing Asia: Prospects and Challenges Conference on the Post-Crisis Growth and Poverty Reduction in Developing Asia Hanoi, Vietnam Anoop Singh Director Asia and Pacific Department March 22, 2010

2. Outline  A Multi-speed Global Recovery  Asian Low-Income Countries (LICs): Achievements and Challenges Achievements and Challenges  The Role of the IMF 2

3. 3 A Multi-Speed Global Recovery

4. 4 Real GDP Growth (Percent; quarter on quarter annualized) Global growth has resumed, boosting exports... Source: IMF, Global Data Source and staff calculations. Nov. 09 Emerging Advanced World Merchandise Exports (Annualized percent change of 3mma over previous 3mma)

5. …but the advanced economies’ recovery is sluggish. 200920102011 PrelimProj.Proj. World-0.63.94.3 Advanced Economies -3.12.12.4 United States United States-2.42.72.4 Euro Area Euro Area-4.01.01.6 Japan Japan-5.01.72.2 Emerging and Developing Economies 2.36.06.3 China China 8.710.09.7 India India 5.67.77.8 Brazil Brazil -0.44.73.7 Emerging Asia 5.68.18.0 ASEAN-4 0.94.65.2 5 Source: World Economic Outlook.

6. Emerging Asia is leading the global recovery. 6

7. The global outlook, however, is unusually uncertain. + A stronger-than-expected improvement in financial market sentiment + Stronger confidence effects boosting private demand − Intensification of market concerns about fiscal sustainability in some industrial economies − Diminished room for policy action in many advanced economies 7

8. Asian LICs: Achievements and Challenges 8

9. Impressive growth, and significant progress in reducing poverty. 9 Real GDP Growth (Average 2000–08, in percent) Poverty Rate for Selected Asian LICs (In percent of population) Source: World Economic Outlook.

10. 10 Asian LICs weathered the global crisis well. Real GDP Growth in Comparison with Pre-crisis Average (2000–07) (percent) Export Growth (3-month moving average, SAAR)

11. The near-term growth outlook is good. 11 Asia: Real GDP ( Year-on-year percent change) Average of 2000–07 2008200920102011 Asian LICs6.36.14.75.66.2 Bangladesh5.86.05.4 5.9 Cambodia9.66.7-2.74.36.8 Lao P.D.R.6.67.87.67.27.4 Mongolia6.68.98.66.5 Nepal3.84.74.04.14.9 Papua New Guinea2.26.74.56.85.1 Sri Lanka5.16.03.55.56.5 Vietnam7.66.25.36.06.5 Emerging Asia7.87.15.68.18.0 NIEs 5.01.7-1.24.84.7 ASEAN-45.24.60.94.65.2 China10.19.68.710.09.7 India 7.27.35.67.77.8 Source: World Economic Outlook.

12. However, there are near-term challenges— inflation is rising and some face external pressures. 12 Emerging Asia: Consumer Prices (3-month percent change of 3-mma, SAAR) Current Account Balance (In percent of GDP) Source: World Economic Outlook. — LICs

13. There are also vulnerabilities from fiscal deficits and relatively high public debt. 13 Fiscal Balance (2008–10) (PPP-GDP weighted average, in percent) Public Debt (2008–10) (In percent of GDP) Source: World Economic Outlook and IMF staff calculations. * Excludes Nepal.

14. How can Asian LICs become the next generation of emerging economies? 14 Nominal per Capita GDP (2008, in U.S. dollars) Illustrative per Capita GDP Growth (in U.S. dollars)

15. 15 Business Climate (Rank among 185 countries, Rank #1 = best climate) Evidence points to building stronger institutions, macro stability, financial development, and a business climate. Source: World Bank, Doing Business Report Global Competitiveness Index 1 (Higher score = more competitive)

16. Strengthening public infrastructure and human capital will clearly also be of central importance. 16 Source: World Economic Forum. Infrastructure Index ( Higher score = better ) Source: UNDP. Human Development Index (Combines education, health and income, higher score = better)

17. Providing a more attractive environment for foreign direct investment will help develop export industries. 17 Exports to GDP (Average 2007–09, in percent) * Excludes resource-based economies. FDI plus Portfolio Investment to GDP (Average 2007–09, in percent)

18. 18 The Role of the IMF

19. 19 The IMF has responded on several fronts.  Increasing global liquidity  IMF members’ central bank reserves were augmented with US$283 billion in new Special Drawing Rights (SDRs)  LICs received around US$ 18 billion  More resources for IMF lending  IMF’s loanable resources were tripled to US$750 billion  In 2009, US$3.8 billion in new concessional loans were extended; a further US$8 billion will be made available in the next two years  Borrowing limits have been doubled for all countries  The cost of borrowing for LICs was reduced to zero percent through 2011 (¼ percent thereafter)  Lending facilities have been improved and made more flexible

20. 20 The IMF has satisfied an unprecedented demand for assistance from a diverse range of member countries. IMF Programs and Precautionary Credit Lines, 1997–2009

21. 21 In Asia, programs with Mongolia and Sri Lanka have helped stabilize the economy and facilitate a return to growth. Sri Lanka Change in Reserves and Growth (2007–11) Mongolia

22. Thank you