World Bank’s growth forecast dips in East Asia: A downward spiral
The World Bank‘s most recent semi-annual report reveals a downward revision in growth predictions for developing economies across East Asia and the Pacific for the years 2023 and 2024. This downward adjustment can be attributed to various factors, including the constraints imposed by tighter financial conditions and the ongoing challenges within the global economic environment.
According to the report, the anticipated Gross Domestic Product (GDP) growth for the region now stands at 5% for 2023 and 4.5% for 2024, marking a slight decline from the April forecasts of 5.1% and 4.8%, respectively.
Despite this adjustment, the World Bank underscores that these growth rates remain comparatively robust when compared to other emerging markets worldwide. The deceleration in economic growth can, in part, be attributed to the economic situation in China, the second-largest economy globally.
China is expected to experience a growth rate of 4.4% in 2024, down from the previously projected 4.8%. Several factors contribute to this slowdown, including persistent issues within the property sector, mounting debt levels, and the waning impact of the post-pandemic economic reopening.
However, the GDP growth forecast for China in 2023 remains unchanged at 5.1%. The report highlights the significant influence of China’s economic performance on the entire region, emphasising that What happens in China matters for the whole region. A 1% reduction in its growth is associated with a reduction in regional growth by 0.3 percentage points.
Excluding China from the equation, the World Bank anticipates marginally accelerated growth for East Asia and the Pacific in 2024.
This expected uptick is closely tied to the projected recovery of the global economy, which is likely to stimulate foreign demand for the region’s commodities and manufactured goods. However, the report issues a cautionary note, highlighting that geopolitical tensions and potential natural disasters, including extreme weather events, could present downside risks to this optimistic outlook, Bangkok Post reported.
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