Oct. 6 (Bloomberg) – Bloomberg’s Stephen Engle reports on the World Bank
lowering its growth forecast for East Asia for the second time this
year, citing the slowdown in China for downgrading expectations. He
speaks to Angie Lau on “Asia Edge.” (Source: Bloomberg)
The World Bank lowered its forecasts for growth in developing East
Asia this year and next as China’s expansion moderates and policy makers
brace for tighter global monetary conditions.
The region is
forecast to grow 6.9 percent in 2014 and 2015, down from 7.1 percent
projected in April, the Washington-based lender said in its East Asia
and Pacific Economic Update released today. China will expand 7.4
percent this year and 7.2 percent next year, compared with 7.6 percent
and 7.5 percent previously forecast, the report showed.
Data
released last month showed China’s industrial-output expansion at its
weakest since the global financial crisis, while moderating investment
and retail sales growth underscore the risks of a deepening economic
slowdown led by a slumping property market. Significant uncertainties
remain that could affect the region’s growth including downside risks in
the euro area and Japan, a sharp tightening in global financial
conditions and international and regional geopolitical tensions, the
World Bank said.
“The best way for countries in the region to
deal with these risks is to address vulnerabilities caused by past
financial and fiscal policies, and complement these measures with
structural reforms to enhance export competitiveness,” Sudhir Shetty, the World Bank’s East Asia and Pacific chief economist, said in a statement.
Photographer: Brent Lewin/Bloomberg
A bicycle rickshaw driver passes by the Bell Tower in Beijing. China’s growth is... Read More
Growth in the region excluding China is expected to
accelerate to 5.3 percent in 2015 from 4.8 percent this year as a
gradual recovery in high-income economies boosts demand for its exports,
and domestic economic reforms advance in the large Southeast Asian
economies, the World Bank said.
Exports Boost
It
raised its forecast for Malaysia’s 2014 growth to 5.7 percent from 4.9
percent in April because of robust exports in the first half, it said.
The surge in shipments helped growth in the economy unexpectedly
accelerate to the fastest pace in six quarters in the three months
through June from a year earlier.
China’s growth is expected to
slow as the government implements policies to address financial
vulnerabilities and structural constraints, the World Bank said.
As
it seeks to strike a balance between containing risks and meeting
growth targets, structural reforms in sectors previously reserved for
state enterprises and services could help offset the impact of measures
to contain local government debt and curb shadow banking, the report
showed.
Protests in Hong Kong will probably slow growth there
this year but haven’t so far had a significant impact on China’s
economy, Shetty said today.
Trade Flows
The world’s second-biggest economy was the top trading partner for the 10-member Association of Southeast Asian Nation’s last year, according to data from the Asean-China Centre.
The
World Bank also cut its forecasts for Thailand’s growth this year to
1.5 percent from an earlier estimate of 3 percent. The country’s junta,
which seized power about four months ago in a coup, has said it will
stop buying farm products directly from growers as state purchases spur
overproduction, distort the market and create stockpiles.
The
country needs to pursue further fiscal reforms following the scrapping
of the rice-pledging scheme and proposals including the revision of
property income taxes warrant serious consideration by the new
government, the World Bank said.
World Outlook
The
global economy is showing signs of recovery, albeit at an uneven pace,
while significant uncertainties remain regarding the strength and
sustainability of the recovery in high-income economies and about the
timing of policy actions by central banks in these countries, the World
Bank said.
The world’s growth is forecast to be 2.6 percent growth in 2014, and an average of 3.3 percent from 2015 to 2017, it said.
“In
this uncertain global environment, there is still a window of
opportunity to enact critical, and in some cases overdue, reforms,” the
World Bank said in its report. “The short-term priority in several
countries is to address the vulnerabilities and inefficiencies that have
been created by an extended period of loose financial conditions and
fiscal stimulus.”
To contact the reporter on this story: Sharon Chen in Singapore at schen462@bloomberg.net
To contact the editors responsible for this story: Stephanie Phang at sphang@bloomberg.net Brett Miller, James Mayger
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