ANCHOR OF ECONOMIC

AND FINANCIAL STABILITY

THE ECONOMY
MODEST GROWTH IN ASIA EX-JAPAN

Growth in Asia ex-Japan came in at 5.2% in 2014, marginally higher compared to the preceding year. The Chinese economy continued to adjust to a slower and less investment-intensive growth path, expanding by 7.4% in 2014, compared with 7.7% the year before. Domestic demand softened, as the country implemented structural reforms whilst also contending with a correction in the real estate market and industrial over-capacity. In the first quarter of 2015, China's growth experienced a further step-down to 7.0% y-o-y, prompting intensified policy easing to support economic activity.

Notwithstanding the slowdown in China, exports of manufactures from the ASEAN-4 countries grew at a faster pace last year, supported by the moderate recovery in the advanced economies. Meanwhile, private consumption remained resilient on the back of favourable labour market conditions. However, the slump in global prices of oil and other commodities, as well as slower growth in investment spending, led to a slight easing of ASEAN GDP growth to 4.7% in 2014, compared to 4.8% in the previous year.

The Northeast Asian-3 economies (NEA-3) turned in a mixed performance, with a build-up in inventories driving the increase in overall growth from 2.8% in 2013 to 3.1% in 2014. The boost from an increase in exports to the G3 was offset by falling shipments to China, which reflected the NEA-3's heavy exposure to the slowing Chinese market.