THE WORLD BANK, REUTERS
SINGAPORE – The World Bank cut its 2012 growth forecast for East Asia and the Pacific region on Monday, with China’s GDP growth outlook down from 9.3% in 2011 to 7.7% this year.
Markets reacted quickly to the news:
Oil and gold prices push sharply lower as World Bank cuts China growth forecast on.mktw.net/SMYxG3
— MarketWatch (@MarketWatch) October 8, 2012
Economic growth in the East Asia and Pacific region may slow down from 8.2% in 2011 to 7.2% this year, before recovering to 7.6% in 2013, according to the East Asia and Pacific Economic Data Monitor. The report only takes into account East Asia’s developing countries, but not richer Asian countries such as Japan, Singapore or South Korea.
“The East Asia and Pacific region’s share in the global economy has tripled in the last two decades, from 6% to almost 18% today, which underscores the critical importance of this region’s continued growth for the rest of the world,” said World Bank Group President Jim Yong Kim.
“Weaker demand for East Asia’s exports is slowing the regional economy, but compared to other parts of the world, it’s still growing strongly, and thriving domestic demand will enable the region’s economy to bounce back to 7.6% next year,” said Pamela Cox, World Bank East Asia and Pacific Regional Vice President.
Poverty in East Asia and Pacific will continue to decline in 2013, according to new report. bit.ly/VCFyoj via @worldbankasia
— World Bank (@WorldBank) October 8, 2012
“Even under difficult global circumstances, poverty in the region will continue to decline, with the share of people living on $2 a day expected to reach 24.5% by the end of 2013, down from 28.8% in 2010,” said Pamela Cox.
The World Bank also cut China’s GDP growth outlook from 9.3% in 2011 to 7.7% this year, because of weak exports and lower investment growth. It expects however China’s growth to rebound to 8.1% in 2013, as stimulus measures kick and global trade improves.
China’s slowdown this year has been significant, and some fear it could still accelerate, stated the report.
“Unlike the rest of the region, China is experiencing a double whammy — the growth slowdown is driven by weaker exports as well as domestic demand, in particular investment growth,” World Bank Chief Economist for East Asia and the Pacific Bert Hofman said at a briefing in Singapore.
The international lender also warned that if the euro zone deteriorated further, this could affect East Asia’s developing economies, mainly through trade and financial market disruptions. Another risk to the region’s outlook is the “fiscal cliff” risk in the United States.
