WB: Growth expected to ease
Growth in developing East Asia and Pacific (EAP) is expected to remain strong and reach 6.3 per cent in 2018, according to the latest World Bank economic report on the region. “Enhancing Potential”, the April 2018 edition of the World Bank East Asia and Pacific Economic Update released last week, underscores that even with favorable prospects, policymakers in the region will be well advised to recognize and address emerging challenges.
Attending to the short-term risks associated with a faster-than-expected rise in interest rates in advanced economies and the possible escalation of trade tensions will require tighter monetary policy and larger fiscal buffers. To raise growth in the longer term, boosting public and private investment, productivity growth, and human capital will be key.
“Robust growth has underpinned the region’s tremendous gains in reducing extreme poverty,” said Ms. Victoria Kwakwa, World Bank Vice President for East Asia and the Pacific. “To build on this success and improve the prospects for the large share of the population who remain economically insecure will require sustaining growth over the longer term. Policymakers need to focus on addressing risks to economic stability while taking steps to enhance longer-term growth potential.”
After growing faster than anticipated in 2017, China is expected to slow moderately to 6.5 per cent in 2018 as its economy continues to rebalance away from investment and towards domestic consumption with policies that focus more on slowing credit expansion and improving the quality of growth.
Excluding China, growth in developing EAP is expected to remain stable in 2018 at 5.4 per cent, reflecting continued robust domestic and external demand. Growth in Indonesia and Thailand is expected to strengthen in 2018, with improved prospects for investment and private consumption. In the Philippines, growth is likely to remain stable in 2018. In Malaysia and Vietnam, growth is expected to ease, as public investment moderates in the former and agricultural production stabilizes in the latter after rebounding in 2017.
Prospects for several of the smaller economies are generally favorable, in part due to higher commodity prices. In Myanmar, economic growth is projected to rise in 2018, although investment prospects could deteriorate with the ongoing developments in Rakhine State. Mongolia’s higher growth is predicated also on continued macroeconomic stabilization. Papua New Guinea could experience a cyclical recovery as commodity prices rise, although the recent earthquake could hurt prospects. Growth in Cambodia is expected to pick up slightly, while Laos will likely see stable growth.
In related news, the IMF’s World Economic Outlook (WEO), Chapter 1, April 2018: Global Prospects and Policies, released on April 17 shows that growth elsewhere in emerging and developing Asia is expected to remain strong. India’s economy is projected to grow at 7.4 per cent in 2018 and 7.8 per cent in 2019, up from 6.7 per cent in 2017. The forecast is unchanged from the October WEO, with the short-term firming of growth driven by a recovery from the transitory effects of the currency exchange initiative and implementation of the national goods and services tax and supported by strong private consumption growth. Among the ASEAN-5 economies (Indonesia, Malaysia, Philippines, Thailand, and Vietnam), broadly stable growth is projected for the group, at 5.3 per cent in 2018 and 5.4 per cent in 2019 (compared with 5.3 per-cent in 2017).
Attending to the short-term risks associated with a faster-than-expected rise in interest rates in advanced economies and the possible escalation of trade tensions will require tighter monetary policy and larger fiscal buffers. To raise growth in the longer term, boosting public and private investment, productivity growth, and human capital will be key.
“Robust growth has underpinned the region’s tremendous gains in reducing extreme poverty,” said Ms. Victoria Kwakwa, World Bank Vice President for East Asia and the Pacific. “To build on this success and improve the prospects for the large share of the population who remain economically insecure will require sustaining growth over the longer term. Policymakers need to focus on addressing risks to economic stability while taking steps to enhance longer-term growth potential.”
After growing faster than anticipated in 2017, China is expected to slow moderately to 6.5 per cent in 2018 as its economy continues to rebalance away from investment and towards domestic consumption with policies that focus more on slowing credit expansion and improving the quality of growth.
Excluding China, growth in developing EAP is expected to remain stable in 2018 at 5.4 per cent, reflecting continued robust domestic and external demand. Growth in Indonesia and Thailand is expected to strengthen in 2018, with improved prospects for investment and private consumption. In the Philippines, growth is likely to remain stable in 2018. In Malaysia and Vietnam, growth is expected to ease, as public investment moderates in the former and agricultural production stabilizes in the latter after rebounding in 2017.
Prospects for several of the smaller economies are generally favorable, in part due to higher commodity prices. In Myanmar, economic growth is projected to rise in 2018, although investment prospects could deteriorate with the ongoing developments in Rakhine State. Mongolia’s higher growth is predicated also on continued macroeconomic stabilization. Papua New Guinea could experience a cyclical recovery as commodity prices rise, although the recent earthquake could hurt prospects. Growth in Cambodia is expected to pick up slightly, while Laos will likely see stable growth.
In related news, the IMF’s World Economic Outlook (WEO), Chapter 1, April 2018: Global Prospects and Policies, released on April 17 shows that growth elsewhere in emerging and developing Asia is expected to remain strong. India’s economy is projected to grow at 7.4 per cent in 2018 and 7.8 per cent in 2019, up from 6.7 per cent in 2017. The forecast is unchanged from the October WEO, with the short-term firming of growth driven by a recovery from the transitory effects of the currency exchange initiative and implementation of the national goods and services tax and supported by strong private consumption growth. Among the ASEAN-5 economies (Indonesia, Malaysia, Philippines, Thailand, and Vietnam), broadly stable growth is projected for the group, at 5.3 per cent in 2018 and 5.4 per cent in 2019 (compared with 5.3 per-cent in 2017).
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