World Bank warns of slowdown for APAC economies
Developing economies of East Asia and the Pacific are set to see slowing growth, with higher-for-longer interest rates and worsening geopolitical tensions clouding the outlook for the region, the World Bank said.
Gross domestic product growth is seen at 4.5% for 2024 and 4.3% for 2025, down from the 5% estimated for 2023, the World Bank said in its semi-annual outlook. While most economies in East Asia and the Pacific are set to grow faster than the rest of the world, their pace is still slower than before the pandemic.
The drag is partly due to the expected deceleration in the world’s second-largest economy, whose expansion is forecast to slow to 4.5% and 4.3% this year and the next, respectively. “China is aiming to transition to a more balanced growth path but the quest to ignite alternative demand drivers is proving difficult,” the World Bank said in its report.
China needs more than just “conventional fiscal stimulus,” the development lender said, adding that stronger social protection, progressive taxation and reallocation of public spending from infrastructure to human capital will help spur consumption.
Excluding China, developing East Asia and the Pacific should post a steady expansion at 4.6% this year and 4.8% next year as goods exports likely rebound and financial conditions ease. The Philippines, Vietnam and Cambodia are poised to grow by above 5% in 2024 and about 6% in 2025. Thailand and Myanmar are the laggards among the region’s major economies.
“Core inflation in the US and EU remains elevated and labor markets remain tight, suggesting interest rates will remain higher than pre-pandemic levels in the in the foreseeable future,” the World Bank said of downside risks. “Political developments within
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