Growth slows, but continues to lead global growth at 7.1% in 2013
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Developing East Asia is expanding at a slower pace as China shifts from an export-oriented economy and focuses on domestic demand, said the World Bank.
Growth in larger middle income countries including Indonesia, Malaysia, and Thailand is also softening in light of lower investment, lower global commodity prices and lower than expected growth of exports, says the East Asia Pacific Economic Update released today.
According to the report, the growth forecast for developing countries in the region is 7.1 per cent for 2013, and 7.2 per cent for 2014. While this is a slight downward revision from World Bank projections in April 2013, developing East Asia is leading other regions.
Thailand's growth is projected at 4 per cent in 2013, against previous projection of 5.3 per cent. But the economy should improve at 4.5 per cent in 2014.
“East Asia Pacific continues to be the engine driving the global economy, contributing 40 per cent of the world’s GDP growth - more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable,” said Axel van Trotsenburg, World Bank East Asia and Pacific Regional Vice President.
Growth in China is expected to meet the official indicative target of 7.5 per cent this year. The short term outlook is improving as industrial production data suggests further strengthening of output in the third quarter of 2013. Growth in 2014 is projected to be 7.7 per cent, but risks remain related to the restructuring of China’s economy – a greater than expected slowdown of investment could have an adverse effect on the region, especially on suppliers of capital goods and industrial raw materials to China.
Excluding China, the region is expected to grow at 5.2 per cent in 2013 and 5.3 per cent in 2014. While domestic demand continues to drive growth, investment growth is moderating in the larger economies of ASEAN, including Indonesia, Thailand, and Malaysia. Consumption and resilient remittances helped boost the Philippine economy.
Growth in the region’s smaller economies was more encouraging: Cambodia benefited from expansion in garment exports and tourism. As the recovery picks up in the US, Japan and the Eurozone, with growth accelerating in the second quarter of 2013, developing countries in East Asia stand to benefit because of their high trade shares in the economy. But they need to be better prepared for potentially disruptive adjustments.
