The World Bank yesterday slashed its growth forecast for developing countries in East Asia and the Pacific for this year to 7.2 percent, dragged down by China’s worst economic performance in 13 years.
It said China’s economy would grow just 7.7 percent this year, down from 9.3 percent last year and its slowest rate since 1999, but added that stimulus measures would help push it back above the crucial 8.0 percent mark next year.
The GDP projections for this year in a report called the East Asia and Pacific Data Monitor were down from a May forecast of 7.6 percent growth in the region and 8.2 percent in China.
The report comes as the Washington-based World Bank and IMF prepare to hold their annual meetings at the end of the week.
The G7 advanced economies are also scheduled to meet to discuss the global outlook.
Despite the downgraded numbers, Bert Hofman, the World Bank chief economist for East Asia and the Pacific, said: “Our main forecast is still that China will have a soft landing.”
He also told journalists in Singapore that while there is a risk of a major slowdown, “we think it’s small, not least because of the policy space that the authorities still have and the likelihood that they will indeed use it.
“They have enough fiscal space, they still have some monetary space so they could revamp the economy ... if and when needed,” he said.
Hofman said that China was being hit by a “double whammy” of an export slowdown and softer domestic demand.
In East Asia and the Pacific, regional GDP growth will be the slowest since last year, even worse than at the peak of the global financial crisis in 2009, Hofman said.
However, the bank said this should rebound to 7.6 percent next year, driven by domestic demand. It warned that a worsening of the eurozone debt crisis, problems in the US and a further slowdown in China are major risks.
Hofman said East Asia and the Pacific’s growth rates are “still the envy of many in the developed world” and its share of the world economy has tripled in two decades to nearly 18 percent of global output.
The region covered by the new forecast comprises China, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Fiji, Laos, Mongolia, Myanmar, Papua New Guinea, the Solomon Islands and East Timor.
The European Central Bank’s pledge vigorously to defend the euro and its pledge of a massive bond-buying program have brought some calm to global markets, but the World Bank said yesterday the situation could still worsen.
“With a ‘major’ crisis, GDP growth could drop by more than two percentage points in 2013,” the report said.
Hofman said such a scenario would involve more than one member exiting the eurozone.
About 15 percent of East Asia’s trade goes directly to Europe and financial turmoil sparked by a major crisis in the eurozone could dampen risk-taking and dent investments and private consumption, Hofman added.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s