APD | East Asia and Pacific Growth to Moderate as Global Headwinds Continue

By APD writer Melo M. Acuña

Manila, April.24（APD）The World Bank today said growth in developing East Asia and the Pacific (EAP) is projected to soften to 6.0 percent in 2019 and 2020, down from 6.3 percent in 2018 due to global headwinds and a continued gradual policy-guided slowdown in China.

In a statement released in Bangkok today, World Bank said the region’s economies “weathered the financial markets volatility” last year due to effective policy frameworks and strong fundamentals which include  diversified economies, flexible exchange rates and solid policy buffers.

The World Bank said though trade policy uncertainty has abated somewhat, global trade growth is likely to moderate further.  This was contained in the report entitled Managing Headwinds, the April edition of the World Bank East Asia and Pacific Economic Update released in Bangkok today.  It was learned domestic demand has remained strong in much of the region, partly offsetting the impact of slowing exports.

“The region’s resilient growth should bring about further poverty reduction, already at historic lows.  By 2021, in fact, we expect poverty to dip below 3 percent,” said Victoria Kwakwa, World Bank Vice President for Asia and Pacific.

“At the same time, however, half a billion people in the region remain economically insecure, at the risk of falling back into poverty – an important reminder of the scale of the challenges facing policymakers,” she added.

The World Bank statement said China’s ongoing, policy-guided slowdown will lead to 6.2 percent in 2019 and 2020, down from 6.6 percent in 2018.  Meanwhile, growth in Indonesia and Malaysia is projected to remain unchanged in 2019 while growth rates in Thailand and Vietnam are expected to be slightly lower in 2019.  In the Philippines, a delay in approving the 2019 national government budget is expected to weigh on GDP growth in 2019, but growth is anticipated to pick up in 2020.

According to the World Bank, growth prospects among the smaller economies in the East Asia and Pacific remain favorable.  Large infrastructure projects are expected to accelerate growth for Lao PDR and Mongolia.  

Cambodia’s growth is expected to remain robust, although at a slower pace than in 2018 due to weaker-than-expected external demand.  Expansionary fiscal policy is expected to boost growth in Myanmar in the short term, though recent structural reforms are expected to support growth in the medium term.  

Growth is expected to pick up in Papua New Guinea in 2019 as the economy recovers from a highly destructive earthquake in 2018.  Growth in Fiji is expected to continue to rise, at a more tempered pace as reconstruction efforts near completion in the aftermath of tropical cyclones.

Andre Mason, World Bank acting chief economist for the East Asia and Pacific region said it is important to recognize that the region continues to face heightened pressures that began in 2018 and as such, could have an adverse impact.

“Continued uncertainty stems from several factors including further deceleration in advanced economies, the possibility of a faster than expected slowdown in China, and unresolved trade tensions,” Mason added. 

(ASIA PACIFIC DAILY)