WB upbeat about growth prospects in East Asia and Pacific
Updated : Friday, April 13, 2018 4:36 PM (GMT+0700)

TheWorld Bank (WB) has forecast that growth in developing East Asia and Pacific(EAP) economies is expected to remain strong and reach 6.3 percent in 2018thanks to prospects for a continued broad-based global recovery and robustdomestic demand.

The World Bank has forecast that growth in developing East Asia and Pacific economies
is expected to remain strong and reach 6.3 percent in 2018 - Source: www.finchannel.com

The April 2018 edition ofthe World Bank East Asia and Pacific Economic Update released on April 12underscores that even with favorable prospects, policy makers in the region willbe well advised to recognise and address emerging challenges. 

Attending to the short-termrisks associated with a faster-than-expected rise in interest rates in advancedeconomies and possible escalation of trade tensions will require tightermonetary policy and larger fiscal buffers. To raise growth in the longer term,boosting public and private investment, productivity growth, and human capitalwill be key.

After growing faster thananticipated in 2017, China is expected to slow moderately to 6.5 percent in2018 as its economy continues to rebalance away from investment and towardsdomestic consumption with policies that focus more on slowing credit expansionand improving the quality of growth.

Excluding China, growth indeveloping EAP countries is expected to remain stable in 2018 at 5.4 percent,reflecting continued robust domestic and external demand.  Growth inIndonesia and Thailand is expected to strengthen in 2018, with improvedprospects for investment and private consumption. In the Philippines, growth islikely to remain stable in 2018. In Malaysia and Vietnam, growth is expected toease, as public investment moderates in the former and agricultural productionstabilises in the latter after rebounding in 2017.

Prospects for several of thesmaller economies are generally favorable, in part due to higher commodityprices. In Myanmar, economic growth is projected to rise in 2018, althoughinvestment prospects could deteriorate with the ongoing developments in RakhineState. Mongolia’s higher growth is predicated also on continued macroeconomicstabilization. Papua New Guinea could experience a cyclical recovery ascommodity prices rise, although the recent earthquake could hurt prospects.Growth in Cambodia is expected to pick up slightly, while Lao PDR will likelysee stable growth.

To address risks tomacroeconomic stability, the WB suggested countries consider tighteningmonetary policies and further strengthening macro prudential regulations. Thiswill be particularly important in countries where high debt levels or rapidcredit growth could exacerbate vulnerabilities in their financial sectors asinterest rates are raised in advanced economies.

To address moderating growthprospects across the region in the medium term, the WB said countries will needto find ways of raising their long-term potential growth. This could include amix of measures aimed at: improving public spending and infrastructureprovision; deepening trade integration and improving trade facilitation;implementing reforms to enhance competitiveness; and building human capital.

With continued threats tothe global trading system, developing EAP can respond by deepening its own tradeintegration and facilitation, through such mechanisms as the ASEAN EconomicCommunity, the Comprehensive and Progressive Agreement for Trans-PacificPartnership, and the Belt & Road Initiative. 

Improving competitivenesswill also be important for countries in the region as they seek to adjust tothe ongoing changes in the manufacturing landscape with the evolution of technology,according to the WB.


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