The World Bank has revised its growth forecast for developing East Asia and the Pacific, citing a sluggish China, weak global demand, high interest rates, and dampened trade.
Key Takeaways
- The World Bank has revised down its growth forecast for developing East Asia and the Pacific due to the sluggishness of China, weak global demand, high interest rates, and dampened trade.
- The region is facing a risk to investment growth due to the increase in government and corporate debt levels, particularly in China, Thailand, and Vietnam.
- Consumption growth may be negatively impacted in China, Malaysia, and Thailand due to high household debt, as more income is utilized for debt repayment resulting in reduced spending.
The World Bank now projects a 5% growth for the region in 2023, slightly lower than its previous forecast. Additionally, it has lowered its growth estimation for China in 2024, due to concerns regarding debt levels and weakness in the property sector.
The economic struggles faced by China, including issues in the property sector and mounting debt, are contributing to this slowdown. However, excluding China, the region may experience slightly faster growth in 2024 as the global economy improves. The report also highlights risks to the region’s outlook, including geopolitical tensions and potential natural disasters.
The report emphasizes the increase in government and corporate debt levels, which may impede investment and lead to higher interest rates. Furthermore, high household debt in China, Malaysia, and Thailand could have a negative impact on consumption.