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Growth in developing East Asia and Pacific has remained resilient and is expected to ease only modestly during 2016-2018, according to a new World Bank report. This outlook is subject to elevated risks and countries should continue to prioritize monetary and fiscal policies that reduce vulnerabilities and strengthen credibility, while deepening structural reforms.
Growth in developing East Asia is expected to ease from 6.5% in 2015 to 6.3% in 2016 and 6.2% in 2017-2018. The forecast reflects China’s gradual shift to slower, more sustainable growth, expected to be 6.7% in 2016 and 6.5% in 2017, compared with 6.9% in 2015.
“Developing East Asia and Pacific continues to contribute strongly to global growth. The region accounted for almost two-fifths of global growth in 2015, more than twice the combined contribution of all other developing regions,” said Victoria Kwakwa, incoming World Bank East Asia and Pacific Regional Vice President. “The region has benefited from careful macroeconomic policies, including efforts to boost domestic revenue in some commodity-exporting countries. But sustaining growth amid challenging global conditions will require continued progress on structural reforms.”
Not including China, the region’s developing countries grew by 4.7% in 2015, and the pace of growth will pick up slightly—to 4.8% in 2016 and 4.9% in 2017-18—driven by growth in the large Southeast Asian economies. However, the outlook for individual countries varies, depending on their trade and financial relationships with high-income economies and China, as well as their dependence on commodity exports.
Among the large developing Southeast Asian economies, the Philippines and Vietnam have the strongest growth prospects, both expected to grow by more than 6% in 2016. In Indonesia, growth is forecast at 5.1% in 2016 and 5.3% in 2017, contingent on the success of recent reforms and implementation of an ambitious public investment program.
Several small economies, including Lao PDR, Mongolia, and Papua New Guinea, will continue to be affected by low commodity prices and weaker external demand. Cambodia’s growth will be slightly below 7% during 2016-2018, reflecting weaker prices for agricultural commodities, constrained garment exports, and moderating growth in tourism. In the Pacific Island Countries, growth is likely to remain moderate.
The East Asia and Pacific Update is the World Bank’s comprehensive review of the region’s economies. It is published twice yearly and is available free of charge at www.worldbank.org/eapupdate.