World Bank Cuts East Asia-Pacific GDP Growth Outlook Amid Slow China Comeback

By BILL MCCOLL

The World Bank cut its gross domestic product (GDP) growth outlook for developing economies in East Asia and the Pacific next year because of a slower-than-expected economic comeback by China.

The World Bank now expects 2024 regional GDP growth of 4.5%, down from its April forecast of 4.8%. In its semiannual update, the bank noted that improving external conditions will lead to a 4.7% expansion outside of China next year.

However, it said that China faces “persistent domestic difficulties,” and that “the fading of the bounce back from the re-opening of the economy, elevated debt, and weakness in the property sector,” as well as structural factors such as aging will limit its growth to 4.4% in 2024.

The bank added that potential unforeseen circumstances such as an increase in international tensions and natural disasters, including extreme weather events, were potential further downside risks for the region’s economy.

The report also predicted 2023 GDP expansion for the region of 5%, a slight decline from its previous 5.1% estimate.

Manuela Ferro, World Bank East Asia and Pacific vice president, said that the region is one of the fastest-growing and most dynamic in the world, even if growth is moderating. She said sustaining high growth over the medium term will require reforms to “maintain industrial competitiveness, diversify trading partners, and unleash the productivity-enhancing and job-creating potential of the services sector.”

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VIA: Investopedia