World Bank cuts growth forecast for East Asia and Pacific

The World Bank forecast that the Vietnamese economy will grow at a speed of 6 percent in 2015, according to the East Asia and Pacific Economic Update released on October 5.The country’s poverty rate is expected to reduce with extreme poverty, which is now set at living on 1.90 Dollars per day or less, tapering off from 2.8 percent in 2012 to 1 percent in 2017. China’s economy is expected to grow at about 7 per cent this year and gradually moderate thereafter, as its economy continues to shift toward a model more dominated by domestic consumption and services, which implies a gradual reduction of growth.

“The depreciations of the Indonesian rupiah and Malaysian ringgit against the USA dollar have reduced the drop in exporter revenues, corporate profits, and household incomes in local currency terms – a valuable shock-absorbing effect”, it said.

Alonso Segura, Peru’s economic minister has announced that China’s economic slowdown and the impending USA interest rate increase would be at the center of discussions during a meeting between the World Bank and the worldwide Monetary Fund (IMF) in Lima this week.

The bank said in a report Monday that it expects the developing countries of the East Asia and Pacific region to grow 6.5 percent in 2015, 6.4 percent in 2016 and 6.3 percent in 2017.

East Asia will create global momentum as it accounts for nearly two-fifths of the world’s economic growth, the World Bank said.

The East Asia Pacific Economic Update looked at the challenging global environment facing the region.

Weak global commodity prices continue to dim the prospects for business profits and household incomes in Indonesia and Malaysia.

These reforms, World Bank Regional VIce President Axel Van Trotsenburg said in the report include regulatory improvements in finance, labor, and product markets, as well as measures that enhance transparency and accountability.

Last month, the Asian Development Bank said slowing growth in China would drag down the developing region’s growth to 5.8% this year. “Commodity importers will maintain a stable – even robust – pace of growth”, it said. China is experiencing a rare slowdown as authorities reform the economy to become more market-based.

A stronger El Ninõ may also hurt agriculture severely which could result in higher prices and slower overall growth.