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Asia Unbound

CFR experts give their take on the cutting-edge issues emerging in Asia today.

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Showing posts for "Economics"

Will There Be Another Asian Economic Meltdown?

by Joshua Kurlantzick
A pawn shop worker sorts through gold jewellery at Easy Money Pawn shop in Bangkok on August 27, 2013. Faced with rising living costs and unable to wait until pay day, growing numbers of Southeast Asians are putting their gold jewelry and designer watches in hock, creating a boom in pawnshops across Singapore, Malaysia, Thailand and Vietnam. Thailand's largest private pawnshop operator, Easy Money, has seen a 15-20 percent rise in the number of customers in recent months, especially in areas near Bangkok, said Managing Director Sittiwit Tangthanakiat. (Athit Perawongmetha/Courtesy Reuters) A pawn shop worker sorts through gold jewellery at Easy Money Pawn shop in Bangkok on August 27, 2013. Faced with rising living costs and unable to wait until pay day, growing numbers of Southeast Asians are putting their gold jewelry and designer watches in hock, creating a boom in pawnshops across Singapore, Malaysia, Thailand and Vietnam. Thailand's largest private pawnshop operator, Easy Money, has seen a 15-20 percent rise in the number of customers in recent months, especially in areas near Bangkok, said Managing Director Sittiwit Tangthanakiat. (Athit Perawongmetha/Courtesy Reuters)

Since the middle of this summer, emerging markets, particularly in Asia, have witnessed massive sell-offs of their bonds, enormous slides in their stock markets, and investors dumping their currencies as fast as they can. Many Asian and foreign analysts of Asian nations now worry that the easy credit masked huge problems in the foundations of emerging economies, and that Asia could witness an economic and financial crisis similar to the devastating meltdown that crushed the region in the late 1990s. This time, such a crisis would be even tougher for the world to withstand: emerging markets are far larger than they were 15 years ago, and a crisis in Asia could take down the entire international economy. Read more »

The Futility of Obama’s Southeast Asia Trip?

by Joshua Kurlantzick
U.S. President Barack Obama speaks as Brunei's Sultan and Prime Minister Hassanal Bolkiah listens during the Trans-Pacific Partnership Leaders meeting at the Hale Koa Hotel during the APEC Summit in Honolulu, Hawaii, on November 12, 2011. (Larry Downing/Courtesy Reuters) U.S. President Barack Obama speaks as Brunei's Sultan and Prime Minister Hassanal Bolkiah listens during the Trans-Pacific Partnership Leaders meeting at the Hale Koa Hotel during the APEC Summit in Honolulu, Hawaii, on November 12, 2011. (Larry Downing/Courtesy Reuters)

Later this week, President Obama will embark on a six-day trip to Southeast Asia, visiting Indonesia, the Philippines, Malaysia, and Brunei, to attend the East Asia Summit, the annual ASEAN leaders summit, and the Asia Pacific Economic Cooperation meeting, along with a global entrepreneurs’ meeting in Malaysia. It might seem surprising that the president would leave the United States at such a critical time in federal budget negotiations, but these are the biggest leaders’ meetings in Asia, and since 2009, the White House has committed to increasing the presence of the president and other top Cabinet officials in Asia. Read more »

Friday Asia Update: Top Five Stories for the Week of September 13, 2013

by Guest Blogger for Elizabeth C. Economy
A man cycles past the water-cooling towers of a coal-fired power plant on a hazy day in Beijing on January 22, 2013. (Jason Lee/Courtesy Reuters) A man cycles past the water-cooling towers of a coal-fired power plant on a hazy day in Beijing on January 22, 2013. (Jason Lee/Courtesy Reuters)

Will Piekos and Sharone Tobias look at the top five stories in Asia this week.

1. Chinese economy posts strong numbers. Chinese overseas shipments in August rose 7.2 percent from a year earlier, increasing more than originally estimated, while inflation stayed below the government target. The industrial sector also showed strong numbers in August, climbing 10.4 percent year-to-year and posting the highest growth rate since March 2012. The data, along with other positive reports, pushed stocks to a three-month high, and experts are generally optimistic about the direction of China’s economy. Read more »

Myanmar Facing Massive Inflation Before Economy Really Gets Going

by Joshua Kurlantzick
Toe Aung, deputy head of urban planning, poses for a photo at the Yangon City hall, with the lit Sule Pagoda seen behind him, in Yangon, on September 5, 2013. Toe Aung, a former army major, bears one of the biggest responsibilities in reform-era Myanmar: planning Yangon's unstoppable transformation from a regional backwater into Southeast Asia's next megacity. (Soe Zeya Tun/Courtesy Reuters) Toe Aung, deputy head of urban planning, poses for a photo at the Yangon City hall, with the lit Sule Pagoda seen behind him, in Yangon, on September 5, 2013. Toe Aung, a former army major, bears one of the biggest responsibilities in reform-era Myanmar: planning Yangon's unstoppable transformation from a regional backwater into Southeast Asia's next megacity. (Soe Zeya Tun/Courtesy Reuters)

A short piece by Agence France-Presse (AFP) run in the Straits Times yesterday, buried amidst the big international stories on Syria and the stand-off in the Philippines and others, caught my attention. The short piece, titled “Poor and Homeless in Costly Yangon” discussed how, because of Myanmar’s political and economic opening, and the lack of quality office and apartment and factory space in Yangon, rents for any decent property have soared through the roof. AFP estimates that land prices in Yangon have risen since 2010, the beginning of Myanmar’s opening, to as much as $700 per square foot now, far more than the price per square foot in Bangkok, which is vastly richer and has twenty-four hour electricity water, and all other modern conveniences. Other articles have suggested that some properties in central Yangon are renting for more than $1000 per square foot, more than rentals in Manhattan. Read more »

China’s Li Keqiang on the Urbanization Warpath

by Elizabeth C. Economy
A labourer has his dinner under his shed at a construction site of a residential complex in Hefei, Anhui province, August 1, 2012. (Stringer/Courtesy Reuters) A labourer has his dinner under his shed at a construction site of a residential complex in Hefei, Anhui province on August 1, 2012 (Stringer/Courtesy Reuters).

Chinese Premier Li Keqiang is on the urbanization warpath. For Li, urbanization—transforming rural Chinese into urban dwellers—has become perhaps the most important issue of his early months as premier. Most recently, on September 7, in advance of November’s Party Plenum to lay out the country’s economic blueprint, he met with a group of experts to discuss urbanization strategies. Scarcely a month goes by where he does not give a speech or offer some commentary on the issue. For Li, successfully urbanizing China is at the heart of the country’s ability to continue to grow economically. Read more »

Emerging Markets’ Currency Crunch

by Joshua Kurlantzick
A money changer (facing camera) helps a customer convert Indonesian rupiah in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters) A money changer (facing camera) helps a customer convert Indonesian rupiah in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters)

Over the past few weeks, investors have been bailing out of the major markets in Asia faster than Jimmy Connors’ tenure as a tennis coach. As Thailand released its 2013 second quarter growth figures, which revealed the country had fallen into a technical recession, investors have been selling off Thai bonds and getting out of the Bangkok stock exchange. In India, the rupee has hit new record lows against other currencies as the country has been reporting enormous current account deficits. In Indonesia, Vietnam, and even more stable Asian economies like Singapore and Malaysia, similar outflows of capital are mounting, exacerbated by the U.S. Federal Reserve’s hints that it may slowly end the period of quantitative easing, marking the worldwide end of cheap credit. Read more »

Is Southeast Asia Headed for a Repeat of the Late 1990s Financial Crisis?

by Joshua Kurlantzick
A money changer holds stacks of Indonesian rupiah notes in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters) A money changer holds stacks of Indonesian rupiah notes in Jakarta on August 20, 2013. Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low. (Beawiharta Beawiharta/Courtesy Reuters)

Quarterly growth reports released in recent weeks for the major economies in Southeast Asia have been pretty grim. This week, Thailand surprised investors and analysts by reporting that its economy had contracted in the second quarter of 2013, falling into a technical recession. In Indonesia, second quarter growth came in below forecasts, while in Taiwan, although the second quarter produced strong growth, the government reduced its forecast for 2013 overall. Meanwhile, Malaysia’s economy grew at a slower-than-expected rate in the second quarter, and the government slashed its forecast for 2013 as a whole. Read more »

China’s Economy Slows but Its Influence Rises

by Joshua Kurlantzick
A vendor counts Chinese Yuan banknotes at a market in Beijing on August 9, 2013. China's consumer inflation steadied in July although factory-gate deflation persisted for a 17th month, official data showed on Friday. (Kim Kyung Hoon/Courtesy Reuters) A vendor counts Chinese Yuan banknotes at a market in Beijing on August 9, 2013. China's consumer inflation steadied in July although factory-gate deflation persisted for a 17th month, official data showed on Friday. (Kim Kyung Hoon/Courtesy Reuters)

Although China’s economy has cooled this year, battering Chinese stock markets and creating worrying prospects for global growth, the slowdown has not necessarily undermined Beijing’s power regionally or around the globe. In a new piece for The National, I analyze the Chinese economic slowdown, the impact of the slowdown on China’s state capitalist companies, and the implications for China’s regional power. Read the whole piece here.

What China Needs to Learn From India

by Elizabeth C. Economy
Labourers are silhouetted against the setting sun as they work at the construction site of a residential building in the southern Indian city of Hyderabad on October 5, 2012. (Krishnendu Halder/Courtesy Reuters) Labourers are silhouetted against the setting sun as they work at the construction site of a residential building in the southern Indian city of Hyderabad on October 5, 2012. (Krishnendu Halder/Courtesy Reuters)

In discussions and writings about the Asia Pacific, India often seems to get short shrift—despite its size, record-breaking economic growth, and growing regional and global influence. Earlier this week, I had the opportunity to pose some questions to the renowned economist—as well as Columbia University professor and my CFR colleague—Jagdish Baghwati about his terrific new book with Arvind Panagariya on India, Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries. Read more »

Asia’s Weakening Economies – How Concerned Should the World Be?

by Joshua Kurlantzick
A child sits on a bag of milled rice at a mill in Suphan Buri province, north of Bangkok on March 11, 2013. Thailand was set to sell half-a-million tonnes of rice on world markets at a loss, to offload a record stockpile deteriorating in quality in warehouses filled with grain bought under a government scheme. (Chaiwat Subprasom/Courtesy Reuters) A child sits on a bag of milled rice at a mill in Suphan Buri province, north of Bangkok on March 11, 2013. Thailand was set to sell half-a-million tonnes of rice on world markets at a loss, to offload a record stockpile deteriorating in quality in warehouses filled with grain bought under a government scheme. (Chaiwat Subprasom/Courtesy Reuters)

The latest reports on developing Asia’s economies seem more and more unsettling. The Asian Development Bank recently cut its projections for 2013 growth for Asia’s developing nations, as well as its growth projection for 2014. Other monitoring groups including the IMF, HSBC, and others have warned of weakness in Thailand, Malaysia, Vietnam, India, and of course China. Read more »