Preserving stability and promoting growth

Growth in developing countries is expected to pick up from 4.8 percent in 2013 to 5.0 percent in 2014, 5.4 percent in 2015, and 5.6 percent in 2016. Stronger global growth will help most developing East Asia Pacific (EAP) countries grow at a steady pace while they adjust to tighter global financial conditions. The structure of domestic demand is undergoing adjustment as countries are trying to unwind internal imbalances and respond to external vulnerabilities. External positions have steadily improved in EAP countries, making them better prepared to manage further normalization of monetary policy in advanced economies. Foreign direct investment flows into developing EAP countries have remained robust. These developments have helped the EAP countries offset the portfolio outflows associated with the scaling back of the quantitative easing program by the United States. The authorities in some of the large economies have employed macro-prudential measures to contain the risks arising from asset price boom including in the real estate market. China's priority is to further reduce total credit growth in the economy, which is still well above nominal gross domestic product (GDP) growth. There are modest fiscal consolidation efforts underway in several countries, with an emphasis on rationalizing fuel and rice subsides, although more needs to be done to rebuild policy buffers and create space for priority spending. The downside risks to the economic prospects of developing EAP are evenly balanced with opportunities for more rapid growth, including through deeper structural reforms. The report is organized in following three parts: part one presents recent developments and outlook; part two focuses on elected emerging issues; and part three presents country pages and key indicators.