The World Bank believes that this reflects a gradual slowdown in China.
Regional growth for East Asia and Pacific countries is forecasted to slip to 6.2% in 2018 from an estimated 6.4% the previous year as China faces a gradual slowdown offsetting a pickup in economic activity in the rest of the region, according to a report from the World Bank.
As Asia’s largest economy, the World Bank believes that China’s economy which is expected to decelerate to 6.4% this year following moves to reduce excess capacity and shed financial sector vulnerabilities, holds a large role in spelling the fate of the whole region.
“A faster-than-expected tightening of global financing conditions, or a steeper-than-expected slowdown in major economies, including China, could exacerbate existing financial vulnerabilities and set back regional growth. A significant disruption to China’s growth could have large regional spillovers,” it said in the report.
Regional risks have also become more balanced but continue to be titled to downside. The World Bank identified three major risks to growth including geopolitical tensions in the Korean peninsula, slowdown in major economies like China and increased protectionist sentiment.
However, growth in commodity exporters like Indonesia is expected to pick up as private consumption gets a boost from gains in real wages whilst Malaysia is projected to remain stable at around 5% on average in the next two years.
For commodity importers like Thailand, growth is projected to remain slightly above 5% on the average reflecting recovery in merchandise exports and tourism. The same holds true with
Vietnam whose growth will dip to a still strong 6.5% thanks to strong agricultural production and export-oriented manufacturing.
Cambodia is expected to remain rapid expansion amidst high trade and FDI inflows whilst the Philippines is projected to be the fastest-growing economy in the ASEAN.
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