World Bank Forecasts East Asian Economic Growth at 6.3% in 2018

Forex News

The World Bank raised its forecast for growth in East Asia and the Pacific for 2018, but warned that a possible trade war between China and the US could damage growth in countries dependent on the supply of goods to China. It is expected, that growth in the developing region of East Asia and the Pacific (EAP), which includes China, will grow by 6.3% in 2018, above 6.2% October's forecast.

At the same time, the pace of interest rate increases in advanced economies is another short-term risk for the region. Interest rates in most economies in the EAP region are currently at historically low levels and monetary tightening may be needed to help offset capital outflows should rates in advanced economies grow faster than awaited.

Meanwhile, countries such as Papua New Guinea, Laos and Myanmar may have to increase their fiscal buffers through a conservative fiscal stance and better public debt management. The World Bank expects the region to grow 6.1% in 2019. China's 2017 growth was a faster-than-anticipated 6.9%, prompting the World Bank to revise up this year's growth projection to 6.5% from October's forecast of 6.4%.

The World Bank suggested bolstering regional trade through mechanisms such as the ASEAN Economic Community, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the China-led Regional Comprehensive Economic Partnership so that the region can try to insulate itself against the threat of a trade war.