Daily Management Review

Though China Is A Major Factor, East Asia Is Growing Faster Compared To The Rest Of The Globe: World Bank


Though China Is A Major Factor, East Asia Is Growing Faster Compared To The Rest Of The Globe: World Bank
Although developing East Asia and the Pacific is growing faster than the rest of the globe, the globe Bank predicts that in 2024 the region's growth would likely decelerate due to challenges in China and general policy uncertainty.
“It is a region that is still outperforming the rest of the world, but it is underachieving relative to its own potential,” Aaditya Mattoo, East Asia and Pacific chief economist at the World Bank, said on Monday .
As per the bank's East Asia and Pacific (EAP) update for 2024, which was announced on Monday, the region's growth is anticipated to decelerate to 4.5% this year, from 5.1% last year. There are more than 2.1 billion people living in the region.
With China excluded, regional growth is expected to accelerate to 4.6% this year from 4.4% in 2023.
“The outlook is subject to downside risks, which include a greater than expected slowdown in the global economy, higher for longer interest rates in major economies, increased uncertainty around the world about economic policies, and an intensification of geopolitical tensions,” the report said.
Although the World Bank predicts that growth in Asia's largest economy will drop to 4.5% this year from last year's 5.2% rise, China has set an official growth target of roughly 5% for 2024. The nation's excessive debt levels, collapsing real estate market, and a hit in domestic consumer confidence have all been blamed for the sluggish economy.
According to Mattoo, all of that has caused production and investment to shift away from China, which may eventually affect output in other nations like Vietnam and Mexico.
“China has become profoundly important for the region, as a source of inputs, as a destination where value added produce in the region is ultimately consumed, and as well as a source of investment,” he said.
The report made clear how many of the EAP region's nations rely on outside demand to grow their exports. Citing nations including Malaysia, Thailand, Vietnam, and Lao, the research stated that "China's importance as the ultimate destination for domestic value-added in the region has significantly increased since early 2000s."
“Several countries in the region are also exposed through trade linkages to economic activity in the US and EU (Cambodia, Malaysia, Philippines, Thailand and Viet Nam),” the report highlighted.
Economic growth for he regions is also being hindered by tother other factors.
“Trade is recovering globally, but at the same time, we see a spate of protectionist policies,” Mattoo said.
“We’re see an easing of financial conditions such as the beast of inflation seeming to be tamed, but at the same time, we see high interest rates and a region where debt is significantly higher than it was before the pandemic.”
In order to "unleash competition, improve infrastructure, and reform education," he continued, "bold policy action" is required. This may strengthen the local economy.
The economist added that China may be a significant economic accelerator in the region if it can work with other countries like Malaysia, Indonesia, the Philippines, and Vietnam to negotiate its transition to high-quality and sustainable growth and avoid protectionism. 
The Managing Director of the International Monetary Fund, Kristalina Georgieva, stated last week at the China Development Forum in Beijing that "pro-market reforms" may accelerate China's growth "considerably faster than a status quo scenario."