The World Bank cut its 2014-2016 growth forecasts for developing East Asia, noting that China was likely to slow due to policies aimed at putting the economy on a more sustainable footing, and it also cautioned of capital-flight risks to Indonesia.
The Washington-based lender expects the developing East Asia and Pacific (EAP) region to grow 6.9 percent this year and next year, down from the 7.1 percent rate it had previously forecast for both years. Growth last year was 7.2 percent.
The bank also trimmed its 2016 growth forecast for the region to 6.8 percent from 7.1 percent.
“The main message of this report is one that I would categorize as cautious optimism,” World Bank East Asia and Pacific chief economist Sudhir Shetty said at a media briefing yesterday on the latest East Asia Pacific Economic Update.
Possible risks to the outlook include a weaker-than-expected recovery in global trade and any abrupt rise in global interest rates, the report said, adding that its baseline scenario was based on an orderly normalization of monetary policy in the US.
The World Bank said growth in China was likely to slow to 7.4 percent this year and 7.2 percent next year, down from 7.7 percent last year. Growth in 2016 was seen at 7.1 percent.
The World Bank had previously seen China’s growth coming in at 7.6 percent this year and 7.5 percent next year and in 2016.
“Measures to contain local government debt, curb shadow banking, and tackle excess capacity, high energy demand and high pollution will reduce investment and manufacturing output,” he said regarding China’s outlook.
China’s economy has struggled to recover from a soft start to the year when growth slowed to its weakest in 18 months in the first quarter.
Beijing has indicated it is prepared to accept slower growth as it tries to wean the world’s second-biggest economy away from dependence on investment and exports in favor of consumption.
A slowdown in the housing market has become a drag on the broader economy, prompting Beijing and local governments to step up their efforts to restore momentum.
The report noted potential risks in the region’s real-estate markets.
There was slim evidence of price bubbles in the larger economies, which limited chances of “significant” house price corrections.
Nevertheless, an abrupt financial tightening could trigger a disorderly adjustment of housing prices, the report warned.
“A major nationwide correction in real-estate prices in China remains unlikely,” the bank said.
Growth in developing East Asia and Pacific excluding China will slow to 4.8 percent this year from 5.2 percent last year due to the slowing economies of Indonesia and Thailand, the World Bank said, adding that growth is likely to rise to 5.3 percent next year.
While the region’s vulnerabilities to capital-flow reversals have decreased over the past year, Indonesia remains relatively exposed due to its high short-term external financing needs, it said.
The US Federal Reserve is expected to start raising interest rates at some point next year, with analysts expecting a more aggressive tightening-cycle by the Fed to potentially trigger a destabilizing flight of capital from some emerging-market economies.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts