• Behind the volatility in the monthly data, the trend pace of growth in the emerging market economies of East Asia (which stretch from S Korea to Indonesia) remains weak. Industrial output and export volumes are barely above year-earlier levels, reflecting sluggish growth in world trade and the impact of domestic factors like the rise in prices and interest rates that are depressing consumer demand in Indonesia, the biggest economy in this group.
• GDP growth in the region was running around 3½% yoy in the first half of 2013, about the same underlying pace as has been seen since early 2012. This reflects modest growth in exports that historically flows into a lack of investment demand in the many outward looking economies of the region. Government policies stimulating domestic demand have helped to put a floor under economic activity, ensuring a relatively soft landing from the sluggishness in world trade compared to similar episodes before.
• August showed a modest improvement in growth for industrial output and exports but, as it was only one months data, it is too early to call a recovery. The business surveys show a mixed picture with a modest improvement in sentiment in South Korea but not much movement elsewhere.
• We are expecting a fairly modest upturn in growth, partly reflecting the absence of a prior recession to bounce back from. Growth across Emerging Asia of around 3½% and 3¾% is predicted for 2013 and 2014. Forecast growth is expected to reach 4¼% in 2015.

For further analysis download the full report.

• Asian Emerging Economies Update – October 2013 (PDF 461 KB)