WB: East Asia Pacific Growth remains resilient
Courtesy: World Bank
Growth in developing East Asia and Pacific has remained resilient and is expected to ease only modestly during 2016-18, according to a new World Bank report. This outlook is subject to elevated risks and countries should continue to prioritize monetary and fiscal policies that reduce vulnerabilities and strengthen credibility, while deepening structural reforms.
According to the report, growth in developing East Asia is expected to fall from 6.5 per cent in 2015 to 6.3 per cent in 2016 and 6.2 per cent in 2017-18. The forecast reflects China's gradual shift to slower, more sustainable growth, expected to be 6.7 per cent in 2016 and 6.5 per cent in 2017, compared to 6.9 per cent in 2015.
“Developing East Asia and Pacific continues to contribute strongly to global growth. The region accounted for almost two-fifths of global growth in 2015, more than twice the combined contribution of all other developing regions,” said Victoria Kwakwa, incoming World Bank East Asia and Pacific Regional Vice President. “The region has benefited from careful macroeconomic policies, including efforts to boost domestic revenue in some commodity-exporting countries. But sustaining growth amid challenging global conditions will require continued progress on structural reforms.”
The East Asia and Pacific Economic Update examines the region's growth prospects against a challenging backdrop: slow growth in high-income countries, a broad slowdown across emerging markets, weak global trade, persistently low commodity prices, and increasingly volatile global financial markets.
Excluding China, the region's developing countries grew by 4.7 per cent in 2015, and the pace of growth will pick up slightly - to 4.8 per cent in 2016 and 4.9 per cent in 2017-18 - driven by growth in the large Southeast Asian economies. However, the outlook for individual countries varies, depending on their trade and financial relationships with high-income economies and China, as well as their dependence on commodity exports.
Among the large developing Southeast Asian economies, the Philippines and Vietnam have the strongest growth prospects, both expected to grow by more than 6 per cent in 2016. In Indonesia, growth is forecast at 5.1 per cent in 2016 and 5.3 per cent in 2017, contingent on the success of recent reforms and implementation of an ambitious public investment program.
Several small economies, including Lao PDR, Mongolia, and Papua New Guinea, will continue to be affected by low commodity prices and weaker external demand. Cambodia's growth will be slightly below 7 per cent during 2016-18, reflecting weaker prices for agricultural commodities, constrained garment exports, and moderating growth in tourism. In the Pacific Island Countries, growth is likely to remain moderate.