ASIA & OCEANIA WINNERS Growth in Central Asia has been stronger than at any time since the global financial crisis, according to the World Bank. Growth is forecast to moderate to 2.3% in 2018’s final data (not yet available at the time of going to print). However, increased capacity utilisation, unemployment rates close to their 2007 levels, and average inflation now exceeding 2% are all signals that regional growth is likely to slow further. Meanwhile, South Asia is expected to remain the fastestgrowing region in the world. Growth in South Asia is forecast to pick up to 6.9% in 2018’s figures, reflecting India’s re-emergence from a slowdown. Growth should further strengthen to 7.1% on average in 2019 – 20, reflecting a broadbased improvement across most of the region. South Asia should maintain its position as the fastest-growing region, and even extend its lead over East Asia and the Pacific. While this forecast is broadly unchanged from January 2018, the expected growth rate is slightly lower, mainly due to a downward revision for Pakistan in 2019.
Economic growth in Japan is projected to remain around 1% in 2018 – 19, due to record-high corporate profits and labour shortages driving business investment – as indicated by the OECD’s latest analysis. In addition, stronger wage gains will support a pick-up in private consumption in 2019. Although a October 2019 consumption tax hike will temporarily reduce demand, growth is projected to resume in early 2020, strengthened by additional government spending and the 2020 Olympic Games in Tokyo. Sustained growth, combined with higher oil prices, is expected to boost inflation to 1.5% (excluding the impacts of the consumption tax hike) in 2020. Government debt relative to GDP, which is the highest recorded in the OECD area, suggests dangers. Achieving fiscal sustainability requires a detailed consolidation programme that includes gradual hikes in the consumption tax, beginning with a planned increase in 2019, and measures to control spending in the face of rapid population ageing. With the working-age population declining, additional policies to sustain employment and structural reforms to bolster productivity are a priority. Monetary policy needs to remain expansionary until the 2% inflation target is achieved.
Global Awards 2019
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