East Asia Updates - June 2018

Abstract

Economic performance in the East Asian region remained favourable in the first quarter of 2018, but entering the second quarter, the economic environment became more challenging. Globally, there are early signs of growth divergence between the United States (US) and the eurozone countries, where the former shows accelerating growth and the latter show signs of deceleration. This growth divergence coupled with other factors has led to capital outflows from emerging market economies and to the US dollar strengthening. Since economic growth in the East Asian region generally remains intact and macroeconomic management has improved, the region is expected to withstand volatility and increasing uncertainty well. Nonetheless, efforts to improve economic fundamentals and strengthen economic cooperation should be continued in order to make the region more resilient to shocks, especially those countries that have weaker economic fundamentals. There has been improvement in the region’s supply-side factors, as reflected in indicators such as ease of doing business and global competitiveness indices. The pace of improvement needs to be maintained and accelerated, especially for countries where significant gaps remain.