Report: World Bank Lowers East Asia’s Growth Forecast Amid China’s Slowdown

The World Bank has downgraded its growth forecast for east Asia’s developing economies due to a slowdown in China. The bank cut its forecast for China’s growth next year to 4.4 percent, lower than the 4.8 percent predicted in April. This is also below the growth forecast of five percent released by China’s policy makers. Weak indicators and a string of dismal economic data are cited as reasons for the downgrade. The bank also revised its 2024 forecast for gross domestic product growth for developing economies in the region to 4.5 percent. This is the slowest rate of growth for the region in five decades, excluding previous crises such as the Asian financial crisis and the global oil shock in the 1970s. Factors contributing to the gloomy outlook include tumbling retail sales, stagnant house prices, increased household debt, lagging private sector investment, and trade tensions between China and the US. The World Bank chief economist for east Asia and the Pacific called for “deeper” service sector reforms to put China on the expected growth track. He also emphasized the importance of reforming the services sector to harness the digital revolution for future growth. The report also highlights the impact of rising household, corporate, and government debt on growth prospects. Additionally, trade tensions between China and the US have affected south-east Asian countries, as their exports of affected products to the US have declined.