Miscellaneous Knowledge Notes
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Publication
Thailand Monthly Economic Monitor: 21 March 2023
(Washington, DC, 2023-03-21)The economy resumed moderate expansion as private consumption and tourism improved at the beginning of 2023, after a disappointing Q4 outturn. However, lingering soft global demand continued to weigh on goods exports, manufacturing, and private investment. Inflation slowed amid easing global energy prices but remained above the Bank of Thailand’s target range of 1-3 percent. As a result, authorities extended energy-related subsidies while maintaining monetary policy normalization. The Thai baht depreciated the most among major ASEAN currencies in February as the current account turned deficit due to slowing export of goods while substantial portfolio flows exited the equity and bond markets. -
Publication
Thailand Monthly Economic Monitor: February 2023
(World Bank, Washington, DC, 2023-03-14)Growth decelerated more than expected to 1.4 percent in Q4 2022 amid the global economic slowdown. Goods trade contracted while manufacturing production and investment weakened. However, robust private consumption and tourism recovery continued to strengthen the outlook. Headline inflation declined but the second-round impact on domestic prices remained. This prompted the Bank of Thailand to continue monetary policy normalization and the government to extend energy-related subsidies. The current account balance returned to surplus in Q4 2022 on the back of substantially improved tourism receipts, supporting the Thai baht. -
Publication
Drivers of Public Debt in East Asia and Pacific Economies
(World Bank, Washington, DC, 2022-12-16)Public debt in developing East Asia and Pacific (EAP) economies has increased markedly since the recession in 2020 induced by COVID-19 pandemic. This brief uses standard debt dynamic accounting decomposition to quantify the main drivers of debt accumulation in developing EAP countries since 2000. In the aftermath of the COVID-19 pandemic, larger primary deficits have been the main drivers of the increase in the ratio of public debt to GDP in most developing EAP economies. While strong GDP growth and, to a certain extent, inflation have helped deflate public-debt-to-GDP ratios during the past two decades, they have, on average, been more muted since the COVID-19 shock. -
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High-Frequency Phone Survey (HFPS) - Phase 2: Sampling Design, Weighting, and Estimation
(World Bank, Washington, DC, 2022-12)After implementing Phase 1 of the High-Frequency Phone Survey (HFPS) project in Latin America and The Caribbean (LAC) in 2020, the World Bank conducted Phase 2 in 2021 to continue to assess the socio-economic impacts of the COVID-19 pandemic on households. This new phase, conducted in partnership with the UNDP LAC Chief Economist office, included two waves. Wave 1 covered 24 countries and Wave 2 covered 22 countries. Of these countries, 13 participated in Phase 1 and the rest joined in Phase 2. This document describes the sampling design, weighting and the right procedure to estimate indicators for the LAC HFPS Phase 2 surveys. -
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Vietnam Macro Monitoring
(World Bank, 2022-12)This brief discusses the economic development of Vietnam for the month of December 2022.The two drivers of economic growth, exports and domestic demand, are moderating. Softer external demand has weighed on Vietnam’s exports. The post-covid consumption rebound also appears to be fading and tighter domestic financial conditions and rising inflation could affect domestic demand going forward. Reflecting weaker external demand, growth of industrial production moderated to 5.3 percent (y/y) in November, the lowest rate since February 2022. CPI inflation reached 4.4 percent (y/y) in November, compared to 4.3 percent recorded a month earlier, with food and housing being two major contributors. Credit growth fell from 16.5 percent (y/y) in October to 15.0 percent (y/y) in November as domestic financial conditions tightened after the State Bank of Vietnam raised key policy interest rates in September and October. The Vietnamese dong gained slightly in value in November 2022 although the dong’s appreciation is one of the smallest compared to major currencies and currencies of its neighbors. As of end November, the national budget registered a 12.1 billion surplus (about 3 percent of GDP). With global financing conditions expected to remain tight and weakening external demand, Vietnamese monetary authorities could consider allowing further flexibility in the exchange rate to absorb changes in the external environment. Fiscal and monetary policy coordination will be critical to ensure price stability in light of accelerating domestic core inflation. A more prudent and prioritized expenditure strategy could focus on ensuring investments in human capital and resilient and green infrastructure to help bolster economic potential and resilience. -
Publication
The Road Not Taken?: Responding to the Energy Price Shock in East Asia
(World Bank, Washington, DC, 2022-11-17)Several countries in East Asia have increased fossil fuel subsidies to keep consumer prices lower than currently high international prices. These subsidies are discouraging the shift in consumption away from fossil fuels, while high prices are encouraging investment in new fossil fuel infrastructure. Providing income transfers instead of price subsidies would encourage consumption of cleaner alternatives, while softening the welfare loss. And subsidizing investment in renewables would avert the risk of being locked in to fossil fuels. The total cost need not be higher than that of fossil fuel subsidies. -
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Resource Misallocation and Distortions: Some Evidence from East Asia
(World Bank, Washington, DC, 2022-11-03)Developing East Asia has undergone a dramatic transformation over the past few decades thanks to a combination of policies that fostered outward-oriented and labor-intensive growth, investments in basic human capital, and sound economic governance. However, slowing growth and shifting patterns in global trade, rapid technological change, and evolving country circumstances present challenges to sustaining past productivity growth and ensuring future growth. Thus, understanding the extent of misallocation and its drivers is an important step toward identifying the types of policies that can improve domestic productivity and the competitiveness of firms. This Research and Policy Brief reviews the evidence for East Asian countries and discusses the limitations of current approaches to measuring misallocation. -
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Vietnam Macro Monitoring
(Washington, DC, 2022-11)This brief focuses on the economic development in Vietnam as of November 2022. Industrial production and retail sales moderated in October as both domestic and external demand slowed. Exports growth slowed to a 12-month low of 4.8 percent (y/y) as external demand weakened amid high inflation, tightening global financial conditions, and heightened global uncertainties. FDI commitment bounced back strongly thanks to a jump in greenfield investment in electricity, gas, and water supply while FDI disbursement maintained a robust growth. Despite falling fuel prices, CPI inflation increased from 3.9 percent (y/y) in September to 4.3 percent (y/y) in October, driven by faster rise in food prices, which account for 21.3 percent of the CPI basket. The economy faces strong headwinds. Slowing external demand and tightening global financial conditions are affecting the exchange rate. Rising inflation and tightening domestic financial conditions could affect domestic demand in the coming months. As US Fed is expected to continue raising interest rates, Vietnamese monetary authorities could consider allowing further flexibility in the exchange rate, including through a quicker pace of depreciation of the reference rate. This could be complemented with continued use of reference interest rates, especially if faster depreciation leads to higher inflation and inflation expectations rise. Given the persistence of exchange rate pressures, direct FX sales should be used judiciously to preserve the FX reserves. Fiscal and monetary policy coordination will be critical to ensure price stability in light of accelerating domestic core inflation. Moreover, recent banking sector volatility calls for increased vigilance and intensified supervision efforts. -
Publication
Philippines Monthly Economic Developments: October 2022
(Washington, DC: World Bank, 2022-10)Headline inflation accelerated in September driven by higher food and energy prices. In addition, core inflation remained elevated, indicating continuing price pressures and strong domestic demand. Robust domestic activity, amid declining COVID-19 cases, contributed to double-digit and broad-based growth of goods imports. Meanwhile, factory output accelerated in August, but goods exports contracted for the second consecutive month amid lingering weakness among main trading partners. Although the unemployment rate remained low in August, underemployment worsened. -
Publication
Vietnam Macro Monitoring, October 2022
(Washington, DC: World Bank, 2022-10)This brief focuses on the economic development in Vietnam as of October 2022. Vietnam’s economy registered a strong growth of 13.7 percent (y/y) in Q3-2022 and 8.9 percent (y/y), mostly reflecting a low base effect. Industrial production and retail sales posted another month of high growth rates (13.0 percent (y/y) and 36.1 percent (y/y)), which could be attributed both to strong economic activities and to the low-base effects. Both exports and imports growth moderated in September 2022 due to weakening demand from major export markets. FDI commitment fell in September affected by the heighted uncertainty about the global economic prospects while FDI disbursement continued to improve. While the economic recovery has remained strong, heightened uncertainties related to the slowing global economy, rising domestic inflation, and tightening global financial conditions warrant increased vigilance and policy agility. Given the economy has not fully recovered and growth in main export markets is expected to slow, continued active fiscal policy to support the economy should be closely aligned with economic outcomes and coordinated with monetary policy. At the same time, as CPI and Core CPI are reaching 4 percent, the policy rate set by the authorities, monetary authorities should be ready to considerfurther tightening of monetary policy to ensure inflation remains anchored. Given the end of forbearance and tightening financial conditions, the financial sector faces heightened risks and prompt SBV guidance would help stem materialization of such risks at the sector level, potentially affecting the real economy. The recent turmoil around the Saigon Commercial Bank (SCB) case highlights the need for increased transparency through timely publication of detailed information about the banking sector performance, an enhanced corporate governance, a strengthened risk-based supervision, including supervision of business groups and related party lending and early intervention, and an enhanced bank resolution framework.