NYJC_H1___H2_ECON_Q2_CASE_STUDY_ANSWER

J2 H2 Economics (9732/1) 1 Question 2 Is Growth Sustainable for Asia? Extract 4: Asian Economies Heading Towards Full Recovery in 2010 The global recession, which started late 2008, hit Asia hard as its economies were mainly powered by manufacturing sector that exports most of the products to industrialized economies. Thanks to swift government response -- including reduction of interest rates, decreasing bank reserve requirements and stimulus spending -- Asian economies led the global recovery from the worst recession in decades. The Asian Development Bank (ADB) said the region's GDP would grow by 4.5 percent last year, a rate higher than many other parts of the world. Experts, however, also warned that early signs of growth will not necessarily translate to a long term recovery, especially as export-reliant Asian economies were still hinged on the performance of developed countries in 2010. And there are no indications yet that the crisis that crippled the U.S. and Europe is finally over. The raft of weak economic data released in the United States this week points to a prolonged patch of slow growth in the world’s largest economy. Dominique Strauss-Kahn, chief of International Monetary Fund (IMF) said China and India will continue to drive the regional economy. Indonesia is expected to lead the recovery for ASEAN countries. The IMF has raised its estimation for Indonesia's GDP growth rate to 5.5 percent this year. Malaysia, the Philippines and Thailand will record GDP growth around 3 percent in 2010 and Singapore around 4 percent. A question is thus raised for Asian governments in 2010 on how and when to implement their exit strategies – the unwinding of previous policy and regulatory guidelines. Adapted from English.news.cn, 2010 Extract 5: Rebalancing Growth Asia must look at boosting domestic demand to cut its reliance on foreign consumers, especially in the hard-hit United States, IMF chief Strauss-Kahn said. "Asian countries themselves have a big enough market to generate the demand now developed countries fail to," said Zhao Xiaoyu, Vice-President of ADB, "but this requires countries to make concerted efforts under regional cooperative platform." On Jan. 1, China's Free Trade Agreement (FTA) with ASEAN came into effect, an important step for Asian's cooperation that could spur much-needed regional investment. The China-ASEAN Free Trade Area (CAFTA), the world's largest free trade area of developing countries, covers a population of 1.9 billion and accounts for about 4.5 trillion U.S. dollars in trade volume. China's Deputy Commerce Minister Yi Xiaozhun said China's investment in Southeast Asia would rise rapidly as firms become more eager to go abroad to invest. Under the FTA, the average tariff on goods from ASEAN countries to China is reduced from 9.8 percent to 0.1 percent. The six original ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thail