World Bank: Growth in East Asia & Pacific Likely to Remain Resilient

The outlook for developing East Asia is expected to remain broadly positive in the next three years, driven by robust domestic demand and a gradual recovery in the global economy and commodity prices, according to a new World Bank report. Poverty in the region is likely to continue to fall, driven by sustained growth and rising labor incomes. The global environment and domestic vulnerabilities, however, still pose risks to the region’s prospects. In the face of faster-than-expected interest rate hikes in the U.S., protectionist sentiments in some advanced economies, and rapid credit expansion and high levels of debt in several East Asian countries, the report recommends that policy makers continue to focus on prudent macroeconomic management and ensuring sustainable fiscal balances in the medium term. The just-released East Asia and Pacific Economic Update expects the Chinese economy to continue to slow down gradually, as it rebalances toward consumption and services. It forecasts China’s growth rate to be 6.5 percent in 2017 and 6.3 percent in 2018, compared with 6.7 percent in 2016. In the rest of the region, including the large economies in Southeast Asia, growth is expected to pick up slightly to 5 percent in 2017 and 5.1 percent in 2018, up from 4.9 percent in 2016. As a whole, the economies of developing East Asia and Pacific are projected to expand at 6.2 percent in 2017 and 6.1 percent in 2018. “Sound policies and a gradual pickup in global economic prospects have helped developing East Asia and Pacific sustain growth and reduce poverty,” said Victoria Kwakwa, World Bank Vice President for East Asia and Pacific. “For this resilience to be sustained, countries will need to reduce fiscal vulnerabilities while improving the quality of public spending and fostering global and regional integration.”