Deloitte Asia Pacific Economic Outlook - December 2011

Australia: Australia’s exports have benefited from a commodity boom led by emerging economies, but the possibility of a second global slowdown may alter this trend. In February, devastating floods wiped out much of its economic growth, so Australia’s economic outlook hinges on developments in the West. Given weak domestic demand and weak employment growth, Australia’s mining sector will play a critical role in the country’s economic progress.

China: China’s economy is clearly slowing down, leading to worries about significant layoffs and social unrest. The central bank is loosening monetary policy. Inflation and property prices are declining while industrial production and the consumer sector are expanding. China’s slowdown may not be deep in the coming year, but a deep downturn in Europe could weaken Chinese exports, and continued imbalances in China’s economy pose risks to longer-term growth.

Indonesia: Indonesia is likely to achieve a respectable growth rate through 2011 and decelerate in 2012. While its export reliance is limited, a decrease in overseas demand may weigh on the economy, and risk-averse foreign investors may decrease their investments. In addition, falling commodity prices and sudden capital flight constitute additional downside risks. The central bank is prepared to intervene in the forex market, but its monetary policy options may be limited if a rice shortage dramatically pushes up inflation.

Japan: The Japanese economy is likely to confront challenging times ahead. The government is taking steps to spur domestic demand and address an unprecedented appreciation of the yen. Its attempts to tackle structural imbalances within its economy have achieved limited success. However, post-tsunami reconstruction efforts and a possible Trans Pacific Partnership may help Japanese exports in the longer term and foster greater economic integration within the region.

Thailand: A devastating flood in Thailand resulted in an estimated $35–45 billion in economic damage. The government proposed higher spending on public reconstruction, and the central bank refrained from tightening its monetary policy at its October meeting, so the Thai economy is expected to bounce back in 2012. On the other hand, global economic uncertainty could pose a bigger threat to the Thai economy.

Asia Pacific Economic Outlook - December 2011  (4069.23 KB) 

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