World Bank cuts E. Asia growth estimate
Global lender welcomes BOJ stimulus
SINGAPORE, April 15, (RTRS): The World Bank on Monday scaled back slightly its 2013 growth forecasts for emerging East Asia and warned about possible over-heating in the region’s larger economies, but the global lender said the Bank of Japan’s sweeping monetary expansion should provide a fillip to developing countries.
Japan’s efforts to stimulate its economy through monetary easing is likely to be “mostly good” for developing Asian economies such as Thailand and the Philippines, which produce components for Japanese exporters, the World Bank said.
The Bank of Japan on April 4 stunned markets by unveiling a monetary expansion campaign with plans to inject about $1.4 trillion into the economy over two years to break a deflationary cycle and end two decades of stagnation. The unprecedented easing has provided fresh momentum to yen bears, with the dollar tapping a four-year high of 99.95 yen on Thursday.
The BOJ’s radical monetary plan, which even eclipsed the US Federal Reserve’s massive quantitative easing program, has caused worries about a wall of money moving into emerging markets and other economies in search of higher returns, potentially stoking inflation and asset bubbles.
However, Bert Hofman, World Bank chief economist for East Asia and Pacific, was sanguine about the BOJ’s ambitious goal. “Japan is trying to get out of this low spend, deflationary environment... If that works, that is good for the world economy, and good for the region. It means a large economy may start growing again,” Hofman told at a media briefing.
The World Bank, in its latest East Asia and Pacific Update, cut its gross domestic product (GDP) growth projection for China by 0.1 percentage point to 8.3 percent for 2013, citing Beijing’s ongoing efforts to restructure its economy.
The revision was made before China earlier on Monday reported slower-thanexpected 7.7 percent year-on-year growth in the first quarter, which was below the World Bank’s own forecast, Hofman said.
The international lender also lowered its forecast for Indonesia to 6.2 percent from 6.3 percent due to an expected moderation in investment growth, but raised its growth outlook for Thailand and Malaysia.