Asian Economy: Past, Present, and Future
Keynote Address at the Securities Analysts Association of Japan International Seminar
April 24, 2015 Hiroshi Nakaso Deputy Governor of the Bank of Japan
Chart 1 GDP Share of the Asian Economy
Share in Global GDP GDP Growth (y/y% chg.) 70 (GDP share of the Asian economy, %) 11 IMF Asia projection 10 60 World 9
50 8 7 40 6
30 5 4 20 3 2 10 1 0 0 CY 1700 1820 1870 1900 1950 1980 2000 2020 CY99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 1990 2010 Notes: 1. Figures up to 1980 are based on Maddison. Figures from 1980 are based on IMF data. 2. Asia here includes the following 16 economies: Bangladesh, China, India, Japan, Myanmar, Nepal, Sri Lanka, the four NIEs (Hong Kong, Singapore, Korea, and Taiwan), and the ASEAN-4 (Indonesia, Malaysia, Philippines, and Thailand). Sources: IMF, Angus Maddison "Statistics on World Population, GDP and Per Capita GDP, 1-2008 AD." 1 Chart 2 Asian Financial Markets
Stock Prices Foreign Exchange Rates
(start of 2013=100) (start of 2013=100) 125 110 Emerging markets Emerging markets taper tantrum taper tantrum 120 Asia Asia Latin America Latin America 115 100 110
105 90 100
95 Depreciation 90 80
85
80 70 13/1 13/7 14/1 14/7 15/1 13/1 13/7 14/1 14/7 15/1
Source: Bloomberg. 2
Chart 3 Economic Growth of Asian Economies
(%) 10 Low-income Middle-income 60s High-income
Japan 8 CY10-13 real GDP per capita growth capita per GDP real China Korea
6 CY10-13
60s 60s CY10-13 4 70s CY10-13 60s 80s India Thailand CY10-13 2
90s 60s 00s 0 500 1,000 5,000 12,000 50,000 real GDP per capita (PPP) （USD）
Note: Annual averages. X-axis represents logarithmic value of Real GDP per capita. Sources: World Bank, Penn World Table. 3 Chart 4 Changes in Global Trade
World Trade Volume Ratio of China’s Imports to GDP
200 (CY2005=100) 35 (%) Accession to WTO 180 World trade volume (Dec. 2001) 30 160 Estimated world trade volume
140 25 120
100 20 80
60 15 40
20 10 CY 91 93 95 97 99 01 03 05 07 09 11 13 CY 95 97 99 01 03 05 07 09 11 13 15
Note: Estimated world trade volume is derived from world trade volume and world GDP in 1996-2007 time span by a simple linear regression, and is extrapolated after 2008. Sources: CPB, HAVER. 4
Chart 5 R&D Investment and Labor Productivity
All Industries Manufacturing 4 (growth rate of labor productivity, %) 8 (growth rate of labor productivity, %)
7 Korea 3 Korea 6
5 United 2 United United States Japan United States 4 Kingdom Kingdom Japan 1 3 France Germany Canada Germany 2 0 France Canada 1 Italy Italy -1 0 01234 0123 (R&D investment, % of GDP) (R&D investment, % of GDP)
Note: Average of 2000-2012. Figures of R&D investment on the right-hand side are base on "Business." Sources: OECD, United Nations, ILO, HAVER. 5 Chart 6 Progress in Urbanization
Urbanization in Asian Economies Urbanization and Growth
(percentage of urban population, %) (GDP per capita in current USD, log) 100 5.5 90 U.N. 5.0 80 projections 70 4.5 China Japan 60 4.0 50 3.5 40
30 World 3.0 20 Asia China 2.5 10 Japan India India 0 2.0 CY 50 60 70 80 90 00 10 20 30 40 50 0 20406080100 (percentage of urban population, %) Note : CY 2014 data. Sources: United Nations, IMF. 6
Chart 7 Business Environment and Infrastructure Needs
Business Environment Asia’s Infrastructure Needs
(ranking based on 189 economies) (trillion USD, 2008 constant price) 5 Ease of Dealing with Starting a Getting Doing Construction Total:8 trillion USD Business Electricity Business Permits 4 Subsectors of Singapore 16211 Transport Hong Kong 381133 Korea 517121 2 Malaysia 18 13 28 27 Taiwan 19 15 11 2 1 Thailand 26 75 6 12 Telecommunications Energy(Electricity) Transport Water andSanitation Ports Airports 0 Roads Railways Japan 29 83 83 28 China 90 128 179 124 Philippines 95 161 124 16 Indonesia 114 155 153 78 India 142 158 184 137
Note: The projection of infrastructure needs covers 30 economies in Asia and the Pacific for the period 2010-2020. Sources: World Bank, Asian Development Bank. 7 Chart 8 Demographic Transition
Fertility Rate Working-Age Population Ratio
7 75 (%) Japan U.N. projections 6 China Korea 70 5 India Thailand 65 4
3 60
2 Japan 55 China 1 Korea India Thailand 0 50 CY55 60 65 70 75 80 85 90 95 00 05 10 CY50 60 70 80 90 00 10 20 30 40 50
Note: Fertility rate refers to total fertility rate. Sources: United Nations, HAVER. 8
Chart 9 Corporate Bonds Outstanding in Asia
4,000 (billion USD) (%) 26 Dominated in local currency 3,500 24 Dominated in foreign currency
3,000 % share of foreign currency, 22 right-scale 2,500 20
2,000 18
1,500 16
1,000 14
500 12
0 10 CY 05 06 07 08 09 10 11 12 13
Note: Aggregate of nine Asian economies, excluding Japan. Source: Asian Bonds Online. 9 Chart 10 Cross-Border DVP Linkage: Illustration
BOJ-NET
Bank A Bank B
JGBs
Japan DVP Overseas
RTGS system Foreign currency funds
Bank A Bank B
Note: DVP (delivery-versus-payment) is a mechanism in which a delivery of securities takes place if, and only if, payment occurs. 10
Chart 11 Chiang Mai Initiative Multilateralisation (CMIM)
【CMIM Image】
Vietnam Brunei Cambodia China Hong Kong, China
CMIM Agreement Thailand Indonesia A commitment by CMIM parties to provide USD to a requesting party using their USD reserves. Singapore Japan
Philippines Myanmar Malaysia Lao PDR Korea 11 Chart 12 Cross-Border Collateral Arrangement
Case between Bank of Japan and Bank of Thailand
Bank of Japan Custodian of the Bank of Thailand Collateral JGBs 3. Notification of 2. Transfer of acceptance of 4. Provision of collateral collateral liquidity JGBs Thai Baht
Bank A’s Bank A’s Headquarters/Branches Branches/Headquarters
1. Collateral transfer instruction
12