ANCHOR OF ECONOMIC

AND FINANCIAL STABILITY

THE ECONOMY
SLOWDOWN IN ASIA EX-JAPAN

Growth in the Asia ex-Japan economies eased to 4.7% in 2015 from 5.2% in the previous year. Reflecting the transitional frictions associated with the ongoing economic rebalancing and structural reforms, the Chinese economy grew at a more moderate pace of 6.9% in 2015, compared to 7.3% in 2014. The overall expansion was underpinned by the services-producing industries, which were buoyed by strong demand for financial services. Meanwhile, the goods-producing industries registered lower growth, as segments of the manufacturing sector continued to face excess capacity. In Q1 2016, GDP growth in China slipped to 6.7% on a y-o-y basis, with fiscal and monetary policy helping to buffer the extent of the slowdown.

With growth easing in China, a hesitant recovery in the G3, and a protracted slump in global commodity markets, exports from the ASEAN-4 countries stagnated in 2015. Nevertheless, private consumption growth stayed resilient, supported by still favourable labour market conditions, while investment picked up on a surge in government capital spending in the second half of 2015. As firmer domestic demand partially offset trade weakness, ASEAN-4 GDP growth dipped only marginally from 4.7% in 2014 to 4.6% in 2015.

The Northeast Asian-3 economies (NEA-3) grew at a sluggish pace of 1.9% in 2015, down from 3.2% in 2014, due to disappointing exports amid lacklustre global demand. However, household spending remained relatively firm, even though signs of a softening in the labour market had emerged towards the end of the year due, in part, to persistent weakness in the manufacturing and tourism sectors.