World Bank: East Asian growth expected to ease to 6.3% this year

Economic growth in developing East Asian countries is expected to ease in the next two years as the slowdown in China and sluggish pricing for commodities linger, according to new forecast released Sunday by the World Bank.

The developing economies in the region, which include China, the Philippines, Vietnam, Indonesia and several smaller countries, will grow 6.3% this year and 6.2% on average in 2017 and 2018, down from 6.5% in 2015, the Washington, D.C.-based organization estimated.

“Developing East Asia and Pacific continues to contribute strongly to global growth,” said Victoria Kwakwa, incoming World Bank East Asia and Pacific Regional Vice President. “The region has benefited from careful macroeconomic policies, including efforts to boost domestic revenue in some commodity-exporting countries. But sustaining growth amid challenging global conditions will require continued progress on structural reforms.”

But in excluding China from its forecast, the World Bank estimates developing East Asian countries will actually grow in the next two years -- 4.8% in 2016 and 4.9% on average in 2017 and 2018 -- from 4.7% last year.

In Southeast Asia, the Philippines and Vietnam are expected post the strongest growth rates in the region, with both countries exceeding 6% this year. Indonesia's economy is also estimated to expand in the next two years, up 5.1% this year and 5.3% in 2017, but it's contingent on "the success of recent reforms and implementation of an ambitious public investment program," the World Bank said.

Cambodia, which relies heavily on agriculture, will post a growth rate that will come in "slightly below 7%" on average in the three-year period from 2016 to 2018. "Weaker prices for agricultural commodities, constrained garment exports, and moderating growth in tourism" will hamper the country's growth, the World Bank said.

“Developing East Asia and Pacific faces elevated risks, including a weaker-than-expected recovery in high-income economies and a faster-than-expected slowdown in China. At the same time, policy makers have less room to manoeuver in setting macroeconomic policy,” said Sudhir Shetty, chief economist of the World Bank’s East Asia and Pacific Region. “Countries should adopt monetary and fiscal policies that reduce their exposure to global and regional risks, and continue with structural reforms to boost productivity and promote inclusive growth.”

Khoa Le

Source: USA Today