Economic Trends in Asia in 1966

Abstract

This paper focuses primarily on the countries of Free Asia, excluding Japan. Reference to Asian countries should be taken as excluding Japan unless Japan's inclusion is specifically stated. The economic performance of the Asian countries in 1966 as measured by growth of real GNP ranged from an impressive 12%o for Korea to a negative 2% for Burma. Over half the countries for which data are available had rates of increase of 5% or better. The average rate of growth for these same countries was also high during the 1960-66 period. In six out of 14 countries, consumer prices rose almost 10% or more. In addition, there was an acceleration in the rate of inflation in 1966 as compared to the trend in 1960-65. Fortunately, no other country matched Indonesia in 1966 with her 635%o increase in prices. The inflationary pressures, however, did contribute to a depreciation of some currencies in free foreign exchange markets. This was particularly true of the currencies of India, Vietnam, Indonesia, Pakistan and Ceylon. Export performance in 1966 varied even more markedly than growth of GNP from country to country. The largest increase in exports was recorded by Korea, with a rise over the previous year of 43%o. Taiwan bad a very respectable 19% gain, followed by Hong Kong, Pakistan and Singapore. Several countries-India, Indonesia, Ceylon, Burma, Cambodia, and Vietnam-had declines in export earnings. This was enough to keep the rate of export growth for the area down to a modest 4%, which was below the rate of growth in 1965. Although exports of a few of the smaller countries have grown rapidly for several years, the sluggish performance of some of the large countries has held down export growth for the area as a whole, excluding Japan. The result is that Japanese exports in 1966 exceeded the exports of all the other Asian countries combined. In 1960, Japanese exports were equal to about half of the total exports for the rest of Asia. The U.S. trade position vis-a-vis the Asian area continued to deteriorate. Between 1964 and 1966, the U.S. trade surplus with the area was cut twothirds, or from $1.5 billion to $500 million. This reflects a rapid rise in U.S. imports and only a moderate rise in U.S. exports. In addition, the U.S. appears to have lost its traditional trade surplus with Japan. In 1964, the