Potential Growth in Emerging Asia

Abstract

Using three distinct approaches - statistical filtering, production function, and multivariate model - this paper estimates potential growth for China, India, and five ASEAN countries (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) during 1993–2013. The main findings include: (i) both China and India have recently exhibited a slowdown in potential growth, largely reflecting a decline of total factor productivity (TFP) growth; (ii) by contrast, trend growth for the five ASEAN countries has been rather stable and might even have increased marginally, with the notable exception of Vietnam; (iii) over the longer term, demographic factors will be much more supportive in India and some ASEAN economies than in China, where working-age population should start shrinking, with the overall dependency ratio climbing by the end of this decade. Improving or sustaining potential growth calls for broad structural reforms.

Keywords: Economic growth, China, India, Asia, Emerging markets, Productivity, Fiscal reforms, potential growth, total factor productivity, emerging Asia, tfp, unemployment, growth rate, growth accounting, nairu, gdp growth, labor force, unemployment rate, labor force participation, growth rates, labor participation, labor force participation rate, rate of unemployment, business cycle, rate of growth, natural rate of unemployment, real gdp, business cycles, growth model, non-accelerating inflation rate of unemployment, gdp per capita, labor participation rate, gdp growth rate

JEL Classification: O11, O17