Despite Strong Growth, Significant Risk Threatens Asia

Most Asian countries have maintained strong economic growth in recent months despite the turmoil in global markets; however, significant downside risks threaten the region’s continued performance. In Thailand, floods threaten to undermine the country’s growth and disrupt regional supply chains. In China, a spate of defaults in the informal banking market is casting a shadow over the country’s prospects

  • Bangladesh: Bangladesh’s deal with India will likely lead to long-term growth of bilateral trade and improvement of domestic infrastructure
  • Cambodia: As Cambodia becomes increasingly integrated into the regional and global economies, it will start drawing significant attention from investors
  • China: Multinationals should watch for news of further SME defaults as they could put a drag on Chinese growth
  • India: India’s Right to Information Act is beginning to create serious problems for corrupt politicians and businessmen
  • Indonesia: Indonesia’s policymakers have shifted their attention from inflation to growth, confident that they have price pressures under control
  • Japan: The economy’s slow path to recovery will further decelerate due to the  global economic slowdown, rising Yen, and continuing energy issues
  • Malaysia: Malaysia has drawn significant FDI so far this year, suggesting that the country remains an attractive destination for manufacturing
  • Pakistan: Recent interest rate cuts, which were aimed at promoting growth, are likely to spur already high inflation
  • Philippines: A recently announced fiscal stimulus package may create opportunities for multinationals operating in the Philippines
  • South Korea: New anti-graft reform measures should help to improve South Korea’s corruption landscape over the medium term
  • Taiwan: Taiwan’s business environment will continue to improve as the island’s leaders work proactively to attract investment
  • Thailand: The recent floods will impact global supply chains for agricultural goods, automobiles, and consumer electronics until at least Q1 2012
  • Vietnam: Pledged foreign direct investment is dropping as growing domestic risks give companies reason to pause

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