Tracking Asia’s Recovery—A Regional Overview
The Recovery Process—Asset Markets and the Real Sector
Following more than a decade of stellar growth, Thailand's GDPcontracted in 1997. The other affected economies (Indonesia,Republic of Korea, henceforth Korea, Malaysia, and the Philippines)grew more slowly in 1997 and by early 1998 output had begun tocontract. By the end of that year, GDP had nose-dived by 13.2percent in Indonesia, 10.4 percent in Thailand, 7.5 percent in Ma-laysia, 5.8 percent in Korea and 0.5 percent in the Philippines. Butthis dramatic reversal of fortunes proved short-lived. Most econo-mies bottomed out and started picking up in late 1998 or early1999. And as the year progressed, economic recovery gatheredmomentum. Korea turned in an outstanding performance in 1999by growing at 10.2 percent. The growth performance of Malaysia,Thailand and the Philippines was more moderate at 5.4 percent,4.0 percent and 3.2 percent, respectively. Indonesia's growth per-formance at 0.23 percent was also positive but slow.While recovery is tangible, it is not yet broad-based. There arevariations in the pattern of recovery across countries, and acrossthe components of aggregate demand and supply. As is usuallythe case, recovery in financial markets has preceded recovery inthe real sector.Also, per capita incomes have yet to climb back to their pre-crisislevels in Indonesia, Malaysia, the Philippines and Thailand. Oneway to gauge the extent of the recovery is to compare per capitaincome levels in local constant prices with the pre-crisis levels(Figure 1). For all countries, but Thailand, 1997 is the most recentpeak in GDP per capita incomes. In Thailand, 1996 is the peak. Bythe end of 1999, only Korea had a level of GDP per capita thatexceeded its previous peak. In all other economies GDP per capitastill has lost ground to make up. Mainly because it did not fall somuch, the Philippines has the shortest way to go, and may regainor exceed its most recent peak by the end of 2000. Malaysia maytake another two years, with full recovery of lost income takingeven longer in Thailand and Indonesia. Even then GDP per capita
Exchange Rate Index
(weekly average, last week of 1997June=100, $/local currency)
Source: ARIC Indicators.
GDP per Capita Index
Note: 1999 data on population are ADB staff forecasts.Sources: ADB, Key Indicators of DevelopingAsian and Pacific Countries; various nationalsources.