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Southeast Asian Affairs 2007 THE REGIONAL ECONOMIES A Year of Growth, Stability, and Resilience Manu Bhaskaran For Southeast Asian economies, the year 2006 was marked by vibrant growth, improving economic stability, and an unexpected degree of resilience to external and domestic shocks. In this sense, it can be said that 2006 was one of the best years for the regional economies since the Asian financial crisis erupted in 1997. This article is divided into two main sections. In the first, we take a panregional approach, reviewing the main factors that drove growth in the region, assessing the sustainability of the improved stability indicators and analysing the reasons for the improved resilience. In the second section, we will review the progress of economies in the core ASEAN region, focusing on these because of the considerably better data available. Economic Growth was Driven Significantly by External Demand1 Table 1 sets out the economic performance of the region in 2006 compared with recent history. In general, growth in gross domestic product (GDP) across the region picked up momentum from 2005, with the first half of 2006 showing particular strength. However, economic data for the second half of the year showed some loss of momentum, though not a serious one. Table 2 brings this out more clearly for those economies where quarterly data is available. Except for Indonesia, growth momentum began to flag a little in the third quarter. Several features of economic growth in 2006 merit comment. Manu Bhaskaran is the Partner/Head of the Economic Research Centennial Group. 32 Manu Bhaskaran TABLE 1 Real GDP growth (annual) by country (Percentages, year-on-year) Country 2000 2001 2002 2003 2004 2005 2006* ASEAN economies Brunei2.83.02.83.81.73.6n.a. Cambodia8.47.76.28.610.013.4n.a. Indonesia4.93.64.54.85.15.65.1 Lao PDR5.85.85.95.86.97.3n.a. Malaysia8.90.34.45.57.25.26.0 Myanmar6.25.35.3-2.60.25.2n.a. Philippines6.01.84.54.96.25.05.4 Singapore10.0-2.34.02.98.76.48.6 Thailand4.82.25.37.06.24.65.3 Vietnam6.86.97.17.37.88.47.9 Other Asian developing economies China Hong Kong India Korea Taiwan 8.4 10.0 4.4 8.5 5.8 8.3 0.6 5.8 3.8 -2.2 9.1 1.8 3.8 7.0 4.3 10.0 3.2 8.5 3.1 3.4 10.1 8.6 7.5 4.7 6.1 TABLE 2 Quarterly economic growth profile 10.2 7.3 8.4 4.0 4.0 10.7 6.8 9.1 5.4 4.8 * Year-to-date figures. Source: Collated by Centennial Group using CEIC database. Country December 2005 March 2006 June 2006 September 2006 Indonesia Malaysia Philippines Singapore Thailand 4.9 5.2 5.3 8.6 4.3 4.8 5.9 5.7 10.6 6.1 5.1 6.2 5.8 8.2 5.1 5.5 5.7 4.8 7.2 4.7 Source: Collated by Centennial Group using CEIC database. First, the region's competitive positioning in global exports has been maintained despite the emergence of strong new competitors such as China. As Figure 1 shows, ASEAN's share of global exports has stayed above 6 per cent The Regional Economies: A Year of Growth, Stability, and Resilience 33 FIGURE 1 ASEAN's share of global exports maintained Source: Collated by Centennial Group using CEIC and WTO databases. FIGURE 2 Robust tech demand for most of 2006 2.0 1.5 1.0 0.5 0.0¦ Book-bill ratio (LHS) Semi billings growth 3MMA (RHS) % y/y t 120 80 40 -40 -80 Jan 98 Jan 99 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Source: Collated by Centennial Group using CEIC and WTO databases. 34Manu Bhaskaran in recent years. This helped the region to benefit from the strength in external demand. The World Bank2 estimates that global output growth increased to 3.9 per cent in 2006 from 3.5 per cent in 2005 and 3.0 per...

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