World Bank sees China slowing over next 2 years

The updated report projects China will grow 6.9 percent this year, before slowing to 6.7 percent and 6.5 percent in the following two years.

Excluding China, the region’s developing economies are expected to grow 4.6 per cent this year, in line with last year’s expansion, the bank said.

Slower recovery of the United States, Euro Area, and Japan will limit the growth of Philippine exports, and that the Philippines needs to start raising productivity to reduce unit labor costs, Chua said.

THE World Bank has trimmed its growth forecast for developing east Asian economies, reflecting risks from China’s slowdown and a looming U.S. interest rate hike.

“In particular, uncertainty surrounds the trajectory of, and spillovers from, China’s economic re-balancing and the expected normalization of US policy interest rates”. “The scope for more public spending to boost short-term growth is limited”.

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

World Bank noted that while strong domestic demand had helped shield Malaysia’s economy from the impact of weakening exports until the early part of 2015, a broad based moderation in output growth is now underway.

The 14-country forecast also includes Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Laos, Myanmar, Mongolia, Fiji, Papua New Guinea, the Solomon Islands and East Timor.

THE bank expects developing Asian and Pacific economies to grow 6.5 per cent this year, down 0.2 percentage points from its previous outlook.

Growth next year was also revised down to 6.7 per cent from its previous estimate of 7 per cent.

“If China’s growth were to slow further, the effects would be felt in the rest of the region, especially in countries linked to China through trade, investment and tourism”. “These factors could generate financial volatility in the short term, but are necessary adjustments for sustainable growth in the long term”.

Axel van Trotsenburg, the bank’s regional vice president, said in a statement the reforms must include “regulatory improvements in finance, labour, and product markets, as well as measures that enhance transparency and accountability”.