World Bank to Upgrade Growth Forecast in East Asia

The growth of East Asia and Pacific (EAP) countries are improving this year, partly because of the better than expected growth in the Chinese economy, says the World Bank on Wednesday. In addition to it, the bank revised the gross domestic product (GDP) growth outlook for the region, up to 0.2 and 0.1 percentage points to 6.4 percent in 2017 and 6.2 percent next year.

Sudhir Shetty, Chief Economist of the East Asia and Pacific Region of the World Bank, said in an interview via video-link, EAP’s growth is forecasted to maintain its strength in the short term, partially because of the China's economy, with expectations to rise by 6.7 percent in the current year, similar to 2016 performance.

The positive economic performance of China in the first half led to an upward revision by the bank, with 6.7 percent in 2017 and 6.4 percent in 2018. While the GDP of China gained 6.9 percent year-over-year during the first six months, supported by the consumption and growing external factors.

However, the growth in the Chinese economy is predicted to slow down next year and in 2019 by 6.4 percent approximately. Due to economic restoration over external demand and investments relative to domestic consumption in the medium term, according to Shetty.

Also, the government of China is projected to keep pursuing policies regarding the control over debt growth, aiming to lessen macroeconomic imbalance and risks. These uncertainties may include the probable restrictions on trading policies and renewed tensions in the financial industry, particularly with the reduction of accommodative monetary policies among leading nations.

Meanwhile, the progress of large Southeast Asian economies in 2017 would likely be moderately fast at 5.1 percent, followed by 5.2 percent next year, which shows a much higher pace versus 4.9 percent in 2016. He also asserted that development in the EAP is currently dealing with some potential risks which involve increase in trade protectionism and geopolitical perils.