World Bank raises East Asia’s 2018 GDP view

JAKARTA — The World Bank raised its growth forecast for East Asia and the Pacific for 2018, but warned that a possible US-China trade war could harm growth in countries that are part of the Chinese goods supply chain.

The Washington-based lender said in a report on Thursday it expected 2018 growth in the developing East Asia and Pacific (EAP) region, which includes China, to expand 6.3 per cent, a notch up from 6.2 per cent forecast in October.

The 2018 forecast is slower than last year’s 6.6 per cent growth, reflecting a slowdown in China as it continues to rebalance its economy away from investment towards domestic consumption, with policies that focus more on slowing credit expansion and improving the quality of growth, the bank said.

China’s 2017 growth was a faster-than-anticipated 6.9 per cent, prompting the World Bank to revise up this year’s growth projection to 6.5 per cent from October’s forecast of 6.4 per cent.

Sudhir Shetty, the World Bank’s chief economist for the region, said the forecast did not take into account a potential trade war between the world’s two largest economies, although he did not feel that one was imminent.

Some US officials and analysts have said they believe the dispute could eventually be resolved via dialogue, but Beijing reiterated on Thursday that no formal talks have taken place.

However, Shetty noted that two thirds of Chinese goods on a US list targeted for increased tariffs are made in a supply chain that stretches across the region, particularly in the Philippines, Malaysia and Vietnam. —