World Bank trims East Asia growth outlook to 6.9 per cent, urges investment, export reforms

By on October 9, 2014

Cargo ships entering one of the busiest ports in the world, Singapore.
Cargo ships entering one of the busiest ports in the world, Singapore.

BANGKOK, Thailand—The World Bank trimmed this year’s growth forecast for developing East Asian economies on Monday and urged governments to improve conditions for investment and exports.

Economies in the region that includes China and Southeast Asia should grow by 6.9 per cent, the Washington-based bank said. That was down from a forecast of 7.1 per cent in April but still gives the region the world’s fastest growth.

Growth, with the exception of China, should pick up next year as developed economies recover and demand for exports increases, the bank said.

China, the region’s biggest economy, is expected to grow by 7.4 per cent this year, easing to 7.2 per cent in 2015, the bank said in its East Asia Pacific Economic Update.

The region “will continue to have the potential to grow at a higher rate—and faster than other developing regions—if policy makers implement an ambitious domestic reform agenda,” said the bank’s vice-president for the region, Axel van Trotsenburg, in a statement.

Such reforms include removing barriers to domestic investment and improving export competitiveness, van Trotsenburg said.

China, Vietnam, Malaysia and Cambodia are “well positioned” to increase exports, the bank said.

Malaysia is forecast to grow by 5.7 per cent, up from a forecast of 4.9 per cent in April, the report said. It said Indonesia’s growth will decline to 5.2 per cent from last year’s 5.8 per cent due to lower commodity prices and smaller government consumption.

The bank warned the region is vulnerable to a sharp slowdown in China, where leaders are trying to boost domestic consumption and reduce reliance on trade and investment.

China is a major consumer of raw materials from its neighbours and a slowdown could hurt commodity producers such as metal exporters in Mongolia and coal exporters in Indonesia.

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