The World Bank has reevaluated its growth projections for developing countries in the East Asia and Pacific region due to ongoing financial constraints and a challenging global economic environment.
The forecasted gross domestic product (GDP) growth for the region stands at 5% for 2023 and 4.5% for 2024. These figures represent a revision from the April estimates of 5.1% for the current year and 4.8% for the following year, as detailed in the World Bank’s East Asia and Pacific Economic Update for October 2023.
While the expected growth for East Asia and the Pacific in 2023 is still above the average for other emerging markets and developing economies, it marks a decrease from the previous projections.
In 2023, China, the world’s second-largest economy, is expected to achieve a GDP growth rate of 5.1%, while the rest of the region, excluding China, is projected to grow at 4.6%. Pacific Island Countries are anticipated to experience a growth rate of 5.2%. However, the GDP growth forecast for China in 2024 has been revised downward to 4.4% from the earlier estimate of 4.8%.
The World Bank’s report highlights challenges facing China, including persistent domestic issues such as the gradual decline in economic rebound following the reopening of the economy, high levels of debt, weaknesses in the property sector, and structural factors like population aging, which are expected to contribute to China’s growth slowing to 4.4% in 2024.
The rest of the East Asia and Pacific region is forecasted to achieve a growth rate of 4.7% in 2024, driven by improved global economic conditions and more favorable financial circumstances, which are expected to offset the impact of China’s deceleration and trade policy measures in other countries.
The report underscores the significance of China’s economic performance for the entire region, noting that a 1% reduction in China’s growth corresponds to a 0.3 percentage point reduction in regional growth.
Excluding China, East Asia and the Pacific are poised to experience slightly accelerated growth in 2024 as the global economy recovers, leading to increased foreign demand for the region’s manufactured goods and commodities, according to the World Bank.
Manuela V. Ferro, Vice-President for East Asia and Pacific at the World Bank, emphasized that the East Asia and Pacific region remains dynamic and among the fastest-growing in the world. However, she stressed the need for reforms to sustain high growth, including measures to maintain industrial competitiveness, diversify trading partners, and tap into the productivity-enhancing potential of the services sector.
The report also identifies potential downside risks to the region’s outlook, including geopolitical tensions and the possibility of natural disasters, including extreme weather events.