Lagging Asian economies hurts World Bank
The World Bank said in a report released on Friday that developing Asia had nearly regained the position it lost during the pandemic, but the recovery was stalling due to lagging productivity.
The report forecasts growth in the region, including China, to accelerate this year after the world’s second-largest economy eased pandemic restrictions on travel and other activities. But the recovery in the rest of the region, excluding China, will be slowed as inflationary pressures and rising household debt are slowing consumer spending, the report said.
The economy across Asia-Pacific is expected to grow at an annual pace of 5.1% this year from 3.5% in 2022, according to the report. Excluding China, however, it is expected to plunge to 4.9% in 2023 after recovering from a pandemic worst of 5.8% in 2022.
Major Asian economies such as Indonesia, the Philippines, Thailand and Vietnam will face risks from a weakening global economy, spillovers from the war in Ukraine and climate change disasters while recovery slows.
Demand for exports from the region has slowed as the Federal Reserve and other central banks target inflation by raising interest rates, making it more costly to buy on credit or get a mortgage. It is
Meanwhile, China’s economy is recovering from the turmoil caused by the pandemic, but has slowed significantly over the long term.
Friction between the US and China over trade and technology is the region’s “most pressing challenge,” the report said.
Trade was diverted to some extent by sanctions and other restrictions imposed by both sides. China has lost market share in exports to the US in recent years, while countries such as Vietnam, Thailand and Indonesia are gaining share. But geopolitics can disrupt trade and limit the sharing of know-how, while preventing other countries from achieving the scale of operations to serve global markets, the report says. .
Private economists have also downgraded their growth forecasts for the region this year, citing the potential for tight monetary policy to push the US and other major economies into recession. Many countries in the region are grappling with onerous debt burdens after spending heavily during the pandemic, but households are also heavily in debt.
“We believe Asian economies will settle with lower GDP growth and higher inflation than pre-pandemic projections as pent-up demand after lockdowns fades,” Oxford Economics’ Song Eun Jong said in a report. said.
The World Bank reports that the region has made great strides in alleviating poverty, but slowing reforms and productivity gains have stalled progress towards higher incomes and reduced inequality. there is But countries need to address long-standing needs for reform, including increased investment in education and public health, to boost productivity and foster sustainable growth.
“Most of the major economies in East Asia and the Pacific have weathered the challenges of the pandemic, but now must navigate a changed global landscape,” said Manuela, World Bank East Asia and Pacific Vice President.・Mr. V Ferro said in a statement. “To regain momentum, more needs to be done to increase innovation and productivity, laying the foundation for a greener recovery.”