World Bank lowers 2023 growth forecasts for East Asia
The World Bank recently adjusted its growth predictions for developing countries in East Asia and the Pacific, pointing to tighter financial conditions and a sluggish global environment. The region's GDP growth is now expected to hit 5% in 2023 and 4.5% in 2024, a slight dip from the April forecasts of 5.1% and 4.8%, respectively. Even with this downgrade, the region's growth rate still outpaces the average growth projected for all other emerging markets and developing economies.
China's GDP growth estimates cut amid property crisis
China's GDP growth projection for 2023 remains steady at 5.1%, according to the World Bank, but the estimate for 2024 has been lowered to 4.4% from the previous 4.8%. This decrease is due to ongoing domestic challenges in China, such as high debt levels, a struggling property sector, and structural factors like an aging population. The report emphasizes that a 1% drop in China's growth correlates with a 0.3 percentage point reduction in regional growth.
Growth projections for Pacific Island countries
In 2023, Pacific Island countries are predicted to see a growth of 5.2%, while the region excluding China is expected to experience a 4.6% growth. The World Bank forecasts a slightly faster growth rate in East Asia and the Pacific, excluding China, in 2024, thanks to an improving global economy and increased foreign demand for the region's manufactured goods and commodities.
World Bank emphasizes need for reforms to sustain high growth
World Bank East Asia and Pacific Vice-President, Manuela V Ferro, highlighted that maintaining high growth in the medium term will require reforms to preserve industrial competitiveness, diversify trading partners, and tap into the potential of the services sector for productivity enhancement and job creation. Despite moderating growth, the East Asia and Pacific region remains one of the fastest-growing and most dynamic areas in the world.
Potential risks to the economic outlook
The World Bank report also pinpointed geopolitical tensions and potential natural disasters, such as extreme weather events, as potential risks to the economic outlook for East Asia and the Pacific. The region's growth trajectory will hinge on how well countries navigate these challenges while implementing necessary reforms to maintain competitiveness and promote economic development.
