The World Bank forecast today that real GDP growth in East Asia will be down to 5.3 percent next year from 7 percent this year and the global economic downturn would undermine the region's efforts to reduce poverty.
The combination of weakening export growth and reduced levels of investment and consumption would hold down GDP growth in the region, according to the bank's latest half-year East Asia and Pacific Update report released today.
It forecast that GDP growth for developing economies in East Asia would drop to 6.7 percent next year from 8.5 percent this year.
The World Bank's definition of East Asia includes China's mainland, Hong Kong SAR, Korea, Singapore, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Lao PDR, Mongolia, New Guinea and the island economies of the Pacific.
While poverty rates are likely to fall further next year and the number of poor people in the region would continue to decline, an estimated 5.6 million more people would have emerged from poverty next year if not for the economic slump, the report said.
As the global financial crisis spreads, East Asian countries would not be spared the full fury of the storm, although they are better prepared than they were for the 1997 Asian financial crisis, the report said.
World Bank vice president for the East Asia and Pacific region Jim Adams applauded East Asian governments for their swift and effective policy interventions to avert the worst impacts of the global crisis.
"Thanks to the quick action of policymakers from virtually every East Asian country, banking systems have been able to deal with the crisis so far, and in a number of countries, economic stimulus packages are being put in place," Adams said. "These actions are helping East Asia continue to play a key stabilizing role and act as a growth pole for the global economy."
Despite the economic downturn, the bank projects that East Asia could still contribute to constitute about one-third of world economic growth this year, he said.
The report said the downside risks for East Asia are substantial in the near term, but highlights that countries will be better positioned to deal with the crisis if they are able to maintain macroeconomic stability, shift exports to faster growing regions in the world, substitute external with domestic demand, and continue with structural reforms to strengthen competitiveness.
"Despite the difficult road ahead, those countries that sustain the sound policies pursued thus far and tackle new challenges decisively will be the ones to emerge in a strengthened position when the global economy begins to recover," said Vikram Nehru, the World Bank's chief economist for East Asia and the Pacific.
(China Daily December 10, 2008)
