East Asia growth remains solid: WB

The region accounts for nearly two-fifths of global economic growth, according to the East Asia Pacific Economic Update released today. 

"Growth in developing East Asia Pacific continues to be solid, but the moderating trend suggests policy makers in the region must remain focused on structural reforms that lay the foundation for sustainable, long-term and inclusive growth. These reforms include regulatory improvements in finance, labor and product markets, as well as measures that enhance transparency and accountability. These policies will reassure investors and markets, and help sustain growth that can help lift people out of poverty,” said Axel van Trotsenburg, regional vice president for World Bank East Asia and Pacific.

The East Asia Pacific Economic Update released today looks at the challenging global environment facing the region. The recovery in high-income economies remains gradual, global trade is growing at its slowest pace since 2009, and the widespread slowdown in developing countries has intensified, particularly in commodity producers affected by lower commodity prices.

The performance trends across East Asia are diverse. China’s economy is expected to grow at about 7 per cent this year and gradually moderate thereafter, as its economy continues to shift toward a model more dominated by domestic consumption and services, which implies a gradual reduction of growth.

The rest of developing East Asia - which includes Thailand - is expected to grow 4.6 per cent in 2015, similar to the rate last year. Commodity exporters such as Indonesia, Malaysia and Mongolia will see slower growth and lower public revenues this year, reflecting weaker global commodity prices. Commodity importers will maintain a stable - even robust - pace of growth. Vietnam, for example, is expected to grow 6.2 per cent in 2015 and 6.3 per cent in 2016. Growth will ease, however, in many of the smaller economies. In Cambodia, lower agricultural output is hurting the economy, although growth will still be 6.9 per cent this year. In Myanmar, severe flooding in July will likely drive down the pace of growth to 6.5 per cent, from 8.5 percent in 2014. Pacific Island countries, meanwhile, will see moderate growth.

“Developing East Asia’s growth is expected to slow because of China’s economic rebalancing and the pace of the expected normalisation of US policy interest rates,” said Sudhir Shetty, chief economist of the World Bank’s East Asia and Pacific Region. “These factors could generate financial volatility in the short term, but are necessary adjustments for sustainable growth in the long term.”