Fri, Apr 14, 2017 - Page 10 News List

World Bank keeps growth view for East Asia, Pacific

Reuters, SINGAPORE

The World Bank yesterday kept its economic growth forecast for this year for developing East Asia and the Pacific (EAP) region unchanged, but added that it is vulnerable to any sharp slowdown in global trade or tightening in financial conditions.

The Washington-based lender expects the region, which includes China, to grow 6.2 percent this year, slowing from 6.4 percent growth last year. It sees growth slowing further to 6.1 percent next year, compared with its previous forecast in October of 6 percent growth.

“Growth in developing East Asia and Pacific is expected to remain resilient, as continued buoyancy in domestic demand, including public and increasingly private investment, is supported by strengthening external demand,” the World Bank East Asia and Pacific Economic Update report said.

“Nevertheless, global and regional vulnerabilities mean that the positive prospects for growth and poverty reduction in the region in this base case are subject to significant risks,” it said.

The World Bank kept its growth forecasts for China unchanged at 6.5 percent for this year and 6.3 percent for next year.

It said countries in the region might need to adjust their accommodative monetary policies as upward pressure on consumer prices could intensify on the back of a pickup in producer prices and projected recovery in commodity prices.

The monetary easing cycle in Indonesia likely needs to be placed on hold, and in the Philippines, policies must be ready to adjust to rising inflationary pressures, the World Bank said.

Additionally, any sharp slowdown in global trade or in China could pose risks to the region’s growth outlook.

“Significant slowdowns in world trade, whether stemming from mounting global protectionist pressures or from unanticipated weakness in global activity, could adversely affect most of the region,” it said.

The World Bank added that the region’s resilience could be tested if global financial conditions tighten faster than expected at a time when the US is normalizing its monetary policy.

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