Evolving economic landscape for inclusive growth in ASEAN: A regional overview

Regional workshop on social inclusiveness in Asias emerging middle income countries

Kensuke Tanaka Project Manager and Economist, Asia Desk OECD Development Centre
13 September 2011 Hotel Borobudur, Jakarta

Regional outlooks

African Economic Outlook since 2001

Southeast Asian Latin American Economic Outlook Economic Outlook since 2010 since 2007 (*)Quarterly publication - This quarter in Asia
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Outline
1 2
Medium-term economic outlook and evolving growth landscape in Asia Structural policy challenges towards inclusive growth - The case of Indonesia - The case of Thailand

Outline
1 2
Medium-term economic outlook and evolving growth landscape in Asia Structural policy challenges towards inclusive growth - The case of Indonesia - The case of Thailand

Near-term outlook: ASEAN economies show resilience (based on Q1, 2011 data)
Regional overview (composite leading indicators)

ASEAN average*
88 8 88 8 8 8

v o 8 N -8

v o 8 N -8

y a 8 M -8

y a 0 M -0

y a 8 M -8

v o 8 N -8 y a 8 M -8

Emerging Asia average**

88 8 88 8 8 8

v o 8 N -8

v o 8 N -8

y a 8 M -8

y a 0 M -0

(Source ) This Quarter in Asia, vol .5, June 2011, OECD Development Centre

y a 8 M -8

v o 8 N -8

y a 8 M -8

Growth will be moderate but keep the growth momentum in 2011

Real GDP growth of Asian countries into 2016 (percentage changes)

(*) Average of six countries includes Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Emerging Asia average includes Average 2011, preliminary results 6 (**)(Source ) OECD Development Centre, MPF-of six countries plus China and India. (please dont quote)

Different engines of growth for the recovery phase

(Contributions to growth in six ASEAN countries, percentage of GDP)

7 (Source ) CEIC, ADB, IMF , OECD Development

Evolving growth landscape (1) Domestic drivers will play a more important role: the way towards inclusive growth
Current account balance of six ASEAN countries
(percentage of GDP)

(Source ) OECD Development Centre, MPF- 2011, preliminary results (please dont quote)

Evolving growth landscape (2) Ageing population in Singapore and Thailand

Singapore
> 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 < 8 8% 0% 8 0 8 % F mle e a
> 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 < 8 8% 0% 8 0 8 % F mle e a 8 % 8 % 8% 8% 8 8

Thailand
> 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 < 8

88 8 8

88 8 8

8 %

8 %

8% 8% 8 8

8% 0% 8 0

8 % F mle e a

8 %

8 %

8% 8% 8 8

M le a
> 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 8 -8 8 8 < 8 8% 0% 8 0

M le a

88 8 8

88 8 8

8 % F mle e a

8 %

8 %

8% 8% 8 8

M le a

M le a

(Source ) OECD Development Centres calculation based on UN and national sources

Fiscal sustainability will gradually improve

Fiscal balance of general government in six ASEAN countries (percentage of GDP)

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(Source ) OECD Development Centre, MPF- 2011, preliminary results (please dont quote)

Fiscal challenges in the region Strengthening medium-term fiscal framework is critical Fiscal spending efficiency Mobilizing tax revenue

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Outline
1 2
Medium-term economic outlook and evolving growth landscape in Asia Structural policy challenges towards inclusive growth - The case of Indonesia - The case of Thailand

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Medium-term priorities differ by country

Country Period Theme

Indonesia

2010-2014 Medium Term Plan 2011- 2015 2011-2016 2010 2020 2007-2011 The10th Plan 2012-2016 The11th Plan

Towards the realization of an Indonesia that is prosperous, democratic and just Charting development towards a high - income nation In pursuit of inclusive growth High skilled people, innovative economy, distinctive global city The philosophy of Sufficiency Economy (Vision of 10th Plan: A green and happy society, Vision 11th Plan: A happy society with equity, fairness and resilience) Renewing the growth model and restructuring the economy

Malaysia Philippines Singapore Thailand

Vietnam

2011-2015

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(Source ) OECD Development Centre, SPPIs- 2011

Structural policy reforms are needed towards inclusive growth: country examples Indonesia
Education (in particular higher education) Labour market regulation

Thailand
- Healthcare schemes - Education (urban- rural disparity, etc)
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Education in Indonesia
Enrollment rates from 1995-2010
(%, by level of education)

Higher education in particular, university level, needs to be upgraded.

OECD- PISA results in 2009

Urban- rural disparity in education infrastructure will not be a negligible issue disparity can be observed in both enrolment and literacy rates.

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(Source) national source and OECD

Labour market regulation in Indonesia

Severance payment for redundancy dismissal (average for workers with 1, 5 and 10 years tenure, in salary weeks)

Rigidity of labour market regulations - in particular, hiring and firing regulations need to be reformed.

Minimum wage policy need to be reformed.

(Source) CEIC and national source

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Healthcare in Thailand
Total public expenditure on health as percentage of GDP (2008)

Healthcare schemes need to reform to provide higher quality of and equal access to services harmonization of three healthcare schemes. Financial sustainability of the system will be a challenge.

(Source) CEIC, national source and OECD

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Education in Thailand
OECD- PISA results in 2009

Unsatisfactory outcomes of education systems needs to be addressed.

Urban- rural disparity - in particular, rural education needs to be strengthened through targeted policies.

(Source) OECD

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Thank you!

Contact: kensuke.tanaka@oecd.org