East Asia and Pacific: Growth Slows as Trade Tensions and Global Uncertainties Intensify

Diep Nguyen

21:35 10/10/2019

BizLIVE -

Weakening global demand, including from China, and heightened uncertainty around ongoing US-China trade tensions has led to a decline in exports and investment growth.

East Asia and Pacific: Growth Slows as Trade Tensions and Global Uncertainties Intensify
Growth in developing East Asian and Pacific economies is expected to slow from 6.3 percent in 2018 to 5.8 percent in 2019 and to 5.7 and 5.6 percent in 2020 and 2021, respectively, reflecting a broad-based decline in export growth and manufacturing activity.  
Weakening global demand, including from China, and heightened uncertainty around ongoing US-China trade tensions has led to a decline in exports and investment growth, testing the resilience of the region, according to Weathering Growing Risks, the October 2019 edition of the World Bank’s East Asia and Pacific Economic Update, released today. 
In the region excluding China, consumption growth remained steady, though slightly lower than the same period last year, supported by monetary and fiscal policies. Growth in the smaller economies of the region, however, remained robust, reflecting country-specific circumstances including steady growth in the tourism, real estate, and extractive sectors. 
“As growth slows, so does the rate of poverty reduction,” said Victoria Kwakwa, World Bank Vice President for East Asia and the Pacific. “We now estimate that almost a quarter of the population of developing East Asia and the Pacific lives below the upper-middle-income poverty line of US$5.50 a day. This includes nearly 7 million more people than we projected in April, when regional growth was looking more robust.”
The report makes clear that increasing trade tensions pose a long-term threat to regional growth.  While some countries have hoped to benefit from a reconfiguration of the global trade landscape, the inflexibility of global value chains limits the upside for countries in the region in the near term. 
“While companies are searching for ways to avoid tariffs, it will be difficult for countries in developing East Asia and the Pacific to replace China’s role in global value chains in the short-term due to inadequate infrastructure and small scales of production,” said Andrew Mason, World Bank Lead Economist for East Asia and the Pacific. 

DIEP NGUYEN

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