Most Asian economies are still enjoying the demographic dividend period, and population aging has not progressed as far as in Japan, Europe, and the United States. Therefore, their consumption-GDP ratios tend to be much lower than those of the advanced economies (Chart 14). Above all, Asia is well known for having a higher propensity to save than any other region of the world.
Since the mid-1980s, movements in both realized inflation and measures of longer-term inflation expectations have been somewhat muted, complicating the task of extracting the precise role of inflation expectations as a determinant of realized inflation. Faust and Wright (2013) review the literature on inflation forecasting and present evidence in support of the conclusion that measures of inflation expectations help predict the trend in inflation.