The World Bank sees a resilient East Asia despite gloomy global conditions and a slowing-down China.
In a report on April 11, the world lender forecasts a marginal growth decline for the developing Asian region from 6.5 percent in 2015 to 6.3 percent in 2016 and 6.2 percent in 2017-2018.
While emerging economies in East Asia have benefited from the implementation of solid economic infrastructure, the region's outlook is still vulnerable to global risks such as a slowdown in developed countries, leading to a slump in exports and market volatility.
The China Connection
China's projected weaker growth will drag down its neighbors' economic performance, depending on the extent of financial and trade relationships they have with the second-largest economy. The World Bank expects China to gradually shift to a slower but more sustainable growth estimated at 6.7 percent for 2016 and 6.5 percent for 2017, down from 6.9 percent in 2015.
Sudhir Shetty, the World Bank's chief economist for East Asia and the Pacific region, says that many companies are moving to China where the quality of infrastructure is better than those in other countries. However, a steep growth decline in China could affect its neighbors with spillover effects and stunt growth in the rest of the Asia-Pacific region.
Shetty cautions countries doing trade with China to adopt monetary and fiscal safeguards to reduce regional risk and exposure to global uncertainty.
Among East Asian nations, the Philippines and Vietnam show the strongest growth prospects, with the World Bank predicting GDP of each economy to scale to 6 percent in 2016.
Indonesia and Malaysia are projected to experience the biggest growth downgrades after a sharp decline in commodity exports. Indonesia's growth rate is forecast at 5.1 percent in 2016 and 5.3 percent in 2017 while Malaysia's expansion is at 4.4 percent in 2016 and 4.5 percent in 2017.
Elsewhere in the region, Thailand's growth rate is pegged at 2.5 percent while Cambodia is forecast to fall below 7 percent for 2016-2018. Papua New Guinea, Mongolia and Lao PDR will continue to experience low commodity prices and weaker export demand.
Victoria Kwakwa, the next regional vice president of the World Bank in East Asia and the Pacific, advises that sustaining growth amid turbulent global conditions will require strong macroeconomic policies and continued efforts on structural reforms.
