Forecasts for developing East Asia cut by World Bank

SINGAPORE: The World Bank lowered its forecasts for growth in developing East Asia this year and next as China’s expansion moderates and policymakers brace for tighter global monetary conditions.

The region was forecast to grow 6.9% in 2014 and 2015, down from 7.1% projected in April, the Washington-based lender said in its East Asia and Pacific Economic Update released yesterday.

China would expand 7.4% this year and 7.2% next year, compared with 7.6% and 7.5% previously forecast, the World Bank report showed.

Data released last month showed China’s industrial output expansion at its weakest since the global financial crisis, while moderating investment and retail sales growth underscore the risks of a deepening economic slowdown led by a slumping property market.

Significant uncertainties remain that could affect the region’s growth including downside risks in the euro-area and Japan, a sharp tightening in global financial conditions and international and regional geopolitical tensions, according to the World Bank.

“The best way for countries in the region to deal with these risks is to address vulnerabilities caused by past financial and fiscal policies, and complement these measures with structural reforms to enhance export competitiveness,” Sudhir Shetty, the World Bank’s East Asia and Pacific chief economist, said in a statement.

Growth in the region excluding China was expected to accelerate to 5.3% in 2015 from 4.8% this year as a gradual recovery in highincome economies boosted demand for its exports, and domestic economic reforms advanced in the large South-East Asian economies, the World Bank said.