Asia Pacific Economic Outlook — February 2012

　　China: Chinese economic growth is slowing down. Despite its current deceleration, China’s economy is experiencing lingering imbalances. The country’s formidable foreign currency reserves declined in the fourth quarter of 2011 without causing the renminbi to appreciate. External demand is impacting China’s export growth.

　　Japan: While an uncertain global macroeconomic environment poses downside risks, news from Japan may improve in 2012.Reconstruction expenditure, including infrastructure projects and tax-breaks for companies will likely support economic activity, allowing Japan’s economy to grow 1.5–2.0 percent.

　　Malaysia: Unlike the heyday of export-led expansion, Malaysia is faced with the prospects of having to turn inward in order to achieve economic growth. While export revenue may not offer much support, domestic demand will likely continue to drive the economy, which is expected to expand by around 4.0 percent this year.

　　Taiwan: Improving investor sentiment will likely help Taiwan’s economy during the first half of the year. The government will need to keep a close eye on demand conditions in the economy. With additional downside risks posed by global uncertainty, economic expansion will likely slow down from 4.0 percent in 2011 to a little above 3.0 percent this year.

　　Vietnam: Vietnam’s GDP growth is likely to slow down in 2012 because of a combination of domestic and foreign economic challenges. Owing to the government’s tighter monetary stance, both private consumption and investment will likely be weaker. Furthermore, external factors could add