Growth rebalancing and investment in Asia and the Pacific

This chapter investigates the historical evolution of domestic responses to domestic and external output shocks originating in the United States and China during the period 1986-2009. It examines how the economies of Singapore, Malaysia, Thailand, the Philippines and Indonesia respond to shocks generated via the US economy. The chapter shows that the responses generally reflect the degree of openness of each of these economies, with Singapore responding to a far greater degree to US-generated shocks than Indonesia. It presents that the influence of US shocks on real output fluctuations in the East Asian region are very strong. The chapter compares responses to the United States and China's output shocks across countries, and draws policy implications. The implication for policymakers is that despite the rapid growth of China's importance to countries in this region, external influences are currently better represented by the United States.