Asia Pacifc
Economic
Forecast
1st Quarter 2017
COVER IMAGE BY JESSICA MCCOURT
03 Australia
Shifting the dial toward the long term
07 Indonesia
Central bank on the move
13 Singapore
Plans for a future economy face challenges
21 South Korea
Business investment faces roadblocks
24 About the authors
25 Additional resources
CONTENTS
Asia Pacifc Economic Outlook2
Australia
Shifting the dial toward the long term
By Dr. Rumki Majumdar
A
USTRALIA witnessed strong economic
growth (3.1 percent year over year) in the
frst half of 2016 owing to the recovery in
commodity prices; increased government spending
on infrastructure; reduced cost of credit, thanks to
the Reserve Bank of Australia (RBA), for easy mon-
etary policy; and China’s renewed stimulus to prop
up construction activities.1 While all these factors
have played out favorably so far, and might even
continue to support growth in the short term, the
medium-term growth outlook is worrying because
of impending domestic and external risks. In other
words, Australia has to focus on factors that enable
sustainable long-term growth, possibly by restruc-
turing its economy.
Domestic risks edging up
Nonmining sectors lack momentum:
Mining
activities have continued to fall, with investment
in the sector declining from its peak of 9.0 per-
cent of GDP in 2012–13 to 4.5 percent in 2015–16.2
According to a Deloitte Access Economics report,
the steepest fall in this sector’s business invest-
ment is likely to happen over the next 18 months,
which implies that Australia has to look elsewhere
for growth.3 However, despite a strong pick-up,
investment in the nonmining sector has only partly
ofset the lacunae created by falling mining invest-
ment. Recent monthly data, such as the industrial
production index and performance management
Though Australia experienced strong growth in the frst half of 2016,
the medium-term growth outlook is worrying because of impending
domestic and external risks. The government might have to concen-
trate on longer-term plans to ensure sustainable growth.
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