ASEAN in the global economy & Laos economic changes · ASEAN in the global economy & Laos economic...
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ASEAN in the global economy & Laos economic changes Workshop on “Lao PDR towards AEC 2015” 3 June 2013, Lao PDR Dr. Witada Aunkoonwattaka Trade and Investment Division, ESCAP [email protected]
Transcript of ASEAN in the global economy & Laos economic changes · ASEAN in the global economy & Laos economic...
ASEAN in the global economy & Laos economic changes
Workshop on “Lao PDR towards AEC 2015”3 June 2013,
Lao PDR
Dr. Witada AunkoonwattakaTrade and Investment Division, ESCAP
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The region of huge potential
3Source: ASEAN Community in Figures 2011
The region of economic divide
GDP per capita by ASEAN states
Source: ASEAN Economic Community Chartbook 2011
The region of high trade dependence
5Source: ASEAN Community in Figures 2011
….But, limited intra-ASEAN trade
• Extra-ASEAN trade remains playing a dominant role..
Source: ASEAN Economic Community Chartbook 2011
…and limited intra-ASEAN investment
7Source: ASEAN Community in Figures 2011
What are the implications?
• High diversity : Integrating the markets will be very difficult.
• Limited intra-ASEAN trade & investment: intra-ASEAN market Integration is not a major driverASEAN market Integration is not a major driverof ASEAN Integration.
• AEC with free movement of goods, services, skilled labour, and freer movement of capital: AEC will bring “production integration” more than market integration
ASEAN IPN for Automobiles
9
Made in the World
10Source: Meng and Miroudot, based on Xing and Detert (2010))
Reflected in sources of investment,
11Source: ASEAN Community in Figures 2011
…in country we trade,
12Source: ASEAN Community in Figures 2011
…. in products we trade
13Source: ASEAN Community in Figures 2011
Loa PDR: Economic changes
Real GDP growth in Loas
12
14
16
18
20
GDP
Agriculture
Industry
A decade of robust growth
0
2
4
6
8
10
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Per
cen
t
Industry
Services
Source: Base on data from CEIC
Robust export performanceReal exports of selected ASEAN countries
Thailand
Viet Nam
Cambodia
Laos PDR
250
300
350
Indonesia
Malaysia
Philippines
0
50
100
150
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2000
=100
Source: Base on UNcomtrade data from WITS
Increasing opennessTrade to GDP
2001
2001
2005
2005
20102010
25
30
35
40
Per
cen
t of G
DP
0
5
10
15
20
Exports to GDP Imports to GDP
Per
cen
t of G
DP
Source: Base on IMF data from CEIC
Heavy reliance on natural resourceExport composition (2011)
Manufactures Manufactures
Ores & metalsOres & metals
Ores & metals
60%
70%
80%
90%
100%
AgricultureAgriculture Agriculture
Fuels
Fuels Fuels
Manufactures
0%
10%
20%
30%
40%
50%
60%
midASEAN5 CLM Laos PDR
Source: Base on UNcomtrade data from WITS
Crowding out manufacturing exports
Source: Base on UNcomtrade data from WITS
What lies ahead with a membership in WTO and AEC?
• Higher degree of economic openness– Increasing trade dependence (within the ASEAN
and ASEAN+6 but perhaps even wider?)
• Inflows of FDI – Natural resources and hydro electricity– Natural resources and hydro electricity– Light manufacturing– Tourism– Agriculture
• Higher export revenue– Driven mainly by mining and electricity exports
Challenges• Will Lao PDR be fitted into the “Factory of Asia”?
– Real value is productivity gains
• Fighting the natural resource curse– Volatility of mining commodity prices– Real exchange rate appreciation– Real exchange rate appreciation– Crowding out manufacturing– Fiscal over-spending in response to high revenue– Rent seeking and corruptions– Increasing inequality
Indicators of NRC
• Currency appreciation• Shrinking of other sectors
– Workers and investment shift to the resource sector
• High inflation• High inflation– High spending + shrinking of productive sector
• Fiscal deficit– Especially, the spending is not for building long-
term competitiveness
Way forward• Powering development with resource income
– Efficient logistics– Hard and soft infrastructure– Human capital development
• Create attractive and competitive environment for FDI– Improving institution mechanisms– Remove barriers to trade and investment
• Prudential macro-management– Structural budget rules– Well-managed foreign exchange reserve– Using financial derivatives to control volatility
Thank you
http://www.unescap.org/tid/ti_report2012/download/index.asp
Appendix
Service exports
2001 2010
Service exports(billion USD)
140,600 488,800(billion USD)
Services in total export
30.6% 21.9%
Travel services (in total services)
69.4% 78.1%
Source: Base on WTO service-trade data
