World Bank trims developing East Asia growth forecasts for 2016, 2017

Two women carrying their shopping bags on a busy street in Shanghai on April 1, 2016.
Two women carrying their shopping bags on a busy street in Shanghai on April 1, 2016.PHOTO: AFP

SINGAPORE (BLOOMBERG, REUTERS) - The World Bank trimmed its 2016 and 2017 economic growth forecasts for developing East Asia and Pacific, and said the outlook was clouded by risks such as uncertainty over China's growth prospects, financial market volatility and further falls in commodity prices.

The Washington-based lender lowered its growth forecast for this year for developing East Asia and Pacific countries marginally to 6.3 per cent from 6.4 per cent, it said in a report on Monday (April 11). Growth is set to ease from an estimated 6.5 per cent in 2015, it said.

While developing nations in East Asia - from Indonesia to China - have benefited from careful economic policies, global risks are considerable and threaten the region's outlook, the lender said. Among these are a slowdown in high-income countries, the slump in exports and financial market volatility.

"Policy makers have less room to maneuver," Sudhir Shetty, chief economist of the World Bank's East Asia and Pacific region, said in a statement. "Countries should adopt monetary and fiscal policies that reduce their exposure to global and regional risks, and continue with structural reforms to boost productivity and promote inclusive growth."

For China alone, the World Bank is forecasting 6.7 per cent economic expansion this year, unchanged from its October estimate. Excluding China, the region is projected to grow 4.8 per cent this year, up from 4.7 per cent in 2015 and 0.1 percentage point lower than previously predicted.

In Southeast Asia, the biggest downgrades in growth forecasts were for Indonesia and Malaysia, both commodity exporters. Indonesia's estimate for 2016 was lowered by 0.2 percentage points to 5.1 per cent, while Malaysia was cut by 0.3 points to 4.4 per cent.

The largest forecast upgrade was for Thailand, with the World Bank now projecting expansion of 2.5 per cent this year, up from 2 per cent in the earlier report.