Oct. 11 – Growth in the Pacific and East Asia is expected to average 7.1 percent in 2013, a small decline from last year’s growth rate of 7.5 percent, according to a report released this week by the World Bank. Despite this decline, however, the region remains the “global growth leader” and will account for nearly two-fifths of the world’s economic growth in 2013, as well as one-third of global growth in trade.
In its biannual East Asia Pacific Update, the World Bank cited slowing exports and lower investment among ASEAN nations for the regions gradual economic slowdown. China’s shift from an export-oriented economy to one driven by domestic consumption also contributed to the bank’s downgrade of growth estimates for the year.
Earlier this year, the World Bank projected growth of 8.3 percent in China’s gross domestic product for 2013, but downgraded this forecast to 7.5 percent after the affects of increased credit liquidity failed to boost the economy as much as previously predicted. Despite this change in forecast, the estimated growth rate is still in line with the Chinese government’s own projections. This growth rate is also expected to remain stable over the coming years.
“In the medium term, China’s growth is expected to remain range bound between 7.5 and 7.7 percent as the authorities emphasize productivity and innovation, and rebalance demand from investment-led to consumption- based growth,” according to the report
Growth in the ASEAN bloc is expected to be slightly lower than overall growth in the Pacific and East Asian region at 5.1 percent in 2013 and 2014 before increasing to 5.4 percent in 2015. ASEAN economic growth was 5.6 percent in 2012. The report credited slowing investment growth for the current decline in growth.
Indonesia witnessed its investment growth fall to a three year low during the second quarter of this year and Thailand has also suffered due to the winding down of large-scale government investments following the floods in 2011.
The Philippines remained a bright spot among the ASEAN nations, with investment growth reaching a ten-year high during the first quarter of 2013 and construction projects growing by nearly 40 percent.
While the Word Bank downgraded forecasts across the board for ASEAN, China and the broader Pacific and East Asian region, the report highlighted to general robustness and positive contribution of these countries to the world’s economic position.
“East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world’s GDP growth – more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable,” said the World Bank’s East Asia and Pacific Regional Vice President Axel van Trotsenburg.
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