World Bank: Asia's economy is not as good as expected

The performance of Asian economies is not as expected and growth in the region is forecast to be slower than last year, according to the World Bank.

A recently released World Bank report said debt, trade barriers and policy uncertainties are weakening Asia's economic dynamism. From 5.1% in 2023, this year's growth is forecast to decrease to 4.5%, slower than before the pandemic but still faster than other regions in the world.

"The region is performing better than much of the rest of the world, but is not reaching its full potential," said Aaditya Mattoo, the World Bank's Chief Economist for East Asia and the Pacific. know.

A rebound in global trade and the prospect of major central banks cutting interest rates will help offset weaker growth in China. This year, Beijing targets growth of about 5%, lower than last year's rate of 5.2%. However, the World Bank forecasts that the country's GDP will increase by 4.5%.

Employees work at the Nio electric vehicle production line at the factory in Hefei, Anhui province, China on August 28, 2022. Photo: Reuters

China is shifting to a more balanced growth path, but stimulating new drivers is not easy. "The challenge for China is to choose effective policies," said Mr. Aaditya Mattoo.

According to him, to reduce dependence on construction - real estate and promote business - consumption activities, financial stimulus is not enough. "What is needed is stronger social welfare, programs to help households spend more to boost demand and thereby encourage businesses to invest," the expert said.

Across the region, the World Bank warns that exports from developing countries in Asia may face trade barriers in important consumer markets such as the US, China, Japan and South Korea. Nearly 3,000 protective policies will take effect from 2023, three times more than in 2019.

Industrial output growth in developing Asia would fall by half a percentage point if U.S. inflation unexpectedly rises and interest rates remain high for longer. At the same time, Chinese tourists to countries heavily dependent on tourism in Asia remain below pre-pandemic levels.

The proportion of private investment in GDP of regional countries is also lower than pre-pandemic levels. This situation has recently been overcome thanks to public investment increasing in the past two years in Vietnam and the Philippines but decreasing in China, Malaysia and Thailand.

With private investment weakening, growth will have to be driven by productivity. But the World Bank finds private companies' competition and innovation are hindered by inadequate protections and skills. The organization recommends that countries remove barriers to competition, improve infrastructure and reform education to narrow the widening productivity gap between Asia's private firms and foreign competitors. area.

Phien An ( according to AP, Nikkei )

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