The World Bank has lowered its growth forecast for East Asia and the Pacific due to a sluggish China, weak global demand, high interest rates, and dampened trade. Government and corporate debt levels and high household debt in China, Malaysia, and Thailand pose risks to investment and consumption growth. The bank predicts a 5% growth for the region in 2023 and lowered its growth estimate for China in 2024. Excluding China, the region may see slightly faster growth in 2024. Geopolitical tensions and natural disasters are also risks to the region’s outlook.
World Bank Lowers Growth Forecast for Developing East Asia and the Pacific
The World Bank has revised its growth forecast for developing East Asia and the Pacific regions, attributing the slowdown to a combination of factors including a sluggish Chinese economy, weak global demand, high interest rates, and dampened trade. The bank now predicts a 5% growth for the region in 2023, slightly lower than its previous projection. Additionally, the growth estimate for China in 2024 has also been lowered due to concerns about debt levels and weakness in the property sector.
Risks to Investment Growth and Consumption
One of the major risks identified by the World Bank is the increase in government and corporate debt levels, particularly in countries like China, Thailand, and Vietnam. This debt burden poses a significant threat to investment growth in the region. Furthermore, high household debt in China, Malaysia, and Thailand could have a detrimental effect on consumption, as a larger portion of income is dedicated to debt servicing, resulting in reduced spending.
Geopolitical Tensions and Natural Disasters Highlighted as Risks
Apart from economic challenges, the World Bank’s report also underscores the potential impact of geopolitical tensions and natural disasters on the region’s outlook. These external factors could further compound the difficulties faced by the developing East Asia and the Pacific economies. Nevertheless, if China is excluded from the analysis, the region may experience slightly improved growth in 2024, aligning with a global economic recovery. However, it remains vital for policymakers to address the mounting debt levels and promote sustainable growth to overcome these challenges effectively.
Source : World Bank lowers growth forecast for developing East Asia due to China’s slowing economy
