ADB's Asian Development Outlook (ADO) 2015 projects that Developing Asia will grow at a steady 6.3% in 2015 and 2016, supported by a strengthening recovery in the major industrial economies and soft global commodity prices. Inflation will slow from 3.1% in 2014 to 2.6% in 2015.

Developing Asia needs a deep, robust financial sector to sustain growth. Policy makers will be challenged to ensure that financial sector development is inclusive, providing broad access to households and firms.

The Eurasian Economic Commission has prepared the Analytical Report "On status of elimination of the barriers for mutual access which prevent functioning of the Eurasian Economic Union domestic market, as well as exemptions and restrictions with respect to the circulation of goods, services, capital and workforce." The Report includes:

 - information on international experience of liberalization and classification of the state economic regulation measures (GATT, WTO, EU, UNCTAD);

- proposals for a definition of "barriers", "exemptions" and "restrictions" terms within the Eurasian integration;

- information on the scope and results of the work for identification and elimination of barriers to mutual access, exemptions and restrictions related to movement of goods, services, capital and workforce, as well as the study of their impact on trade and production within the CU and the CES in 2013-2014;

- proposals for organization and directions of the future work.

Source: Eurasian Economic Commission official web-site

Article IV Consultations country reports and other IMF materials

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Relations between South and North Korea are defined as “special,” implying their innate instability. Inter-Korean relations are affected not only by internal factors within the two Koreas, but also external factors, such as the US. For China, issues on the Korean Peninsula are viewed from three images. First, there are specific issues such as the North Korean nuclear issue; second, there is the issue of the reunification of the Korean Peninsula; and third, there is the issue of the Northeast Asian regional security structure, with the Korean Peninsula at the center. China will take, as it has taken, the assurance of peace and stability on the Korean Peninsula as the basis of its primary strategic objective. At the same time, it will pursue its policy on the Korean Peninsula, encompassing policy toward both the North and South, based on the aforementioned three images.

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New IMF book on the topic “Frontier and Developing Asia - The Next Generation of Emerging Markets” analyzes issues related to economic growth and structural transformation as well as financial sector and monetary policy framework issues of Emerging Markets in Asia.

While emerging markets have played an important role on the global economic stage for some time and are now a major driver of global growth, a new group of fast-growing low-income countries, sometimes referred to as frontier economies, is receiving increased attention and has become the darling of capital markets. The question is whether these countries will become the next generation of emerging markets and what lessons can be learnt that might be relevant for other low-income countries that want to grow more rapidly and join the group of frontier economies.

New Overseas Development Institute`s (ODI) paper analyses the creation and potential operational scale of the BRICS New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB). The focus is on how membership, governance arrangements and the financial requirements inherent in the multilateral development bank (MDB) organisational model are shaping the trajectories of the NDB and AIIB. Choices made in these areas are already differentiating the two banks, with the AIIB appearing likely to achieve greater scale in development finance. The paper projects the financial capacity of the two new MDBs based on shareholder capital and likely financial performance, and considers a number of options for the NDB and AIIB to increase their operational impact.

Full paper at the ODI web-site

The Economic Outlook for Southeast Asia, China and India is an annual publication on Asia’s regional economic growth, development and regional integration process. It focuses on the economic conditions of the Association of Southeast Asian Nations (ASEAN) member countries – Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam –, and also addresses relevant economic issues in China and India. The Outlook provides an update of regional economic trends and policy challenges. The 2015 edition of the Economic Outlook for Southeast Asia, China and India comprises two main parts. The first part presents the regional economic monitor, depicting the medium-term economic outlook and macroeconomic challenges in the region. The second part consists of three chapters on "institutional capacity".

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Building on an initial assessment of constraints to development in Myanmar (Volume 1), this second volume provides analysis and policy recommendations in three key areas: structural transformation, education and skills, and financing development. It finds that Myanmar faces a crucial few years to shape growth towards a higher, more sustainable and equitable trajectory. To succeed, it will require a transformation of the economy from an agrarian base reliant on small-scale agriculture at present towards a broad range of modern activities. Building up the right skills in the workforce will be essential to support this structural transformation. Myanmar’s transformation will also depend upon how effectively the country can mobilise and allocate the financial resources needed to support its development, which could amount to as much as an additional 5-10% of GDP on average over the next two decades.

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IMF released a new working paper on the topic “Made in Mexico: Energy Reform and Manufacturing Growth” which assesses the real effects of the energy reform in Mexico by looking at its impact on manufacturing output through changes in energy prices.

Full text at the IMF web-site

DECEMBER 2014

Gordon Orr

What do you get when you add slower economic growth, greater volatility, and rising competition to more international flights and genuine Chinese innovation? McKinsey director Gordon Orr’s annual predictions.