The World Bank has revised its growth estimates for developing countries in East Asia and Pacific for 2023 and 2024, according to the organization’s East Asia and Pacific October 2023 Economic Update. The gross domestic product (GDP) growth is now estimated at 5% in 2023 and 4.5% in 2024, compared to April’s forecasts of 5.1% and 4.8% respectively. This revision comes as the region grapples with tighter finances and a weak global environment.
Despite the downward revision, this year’s regional growth remains higher than the average growth projected for all other emerging market and developing economies, albeit lower than previously anticipated. The World Bank projects China’s economy, the world’s second-largest, to grow by 5.1% in 2023. Excluding China, the region is expected to see a growth of 4.6%. The Pacific Island Countries are projected to experience a growth rate of 5.2%.
However, China’s GDP growth estimates for 2024 have been reduced to 4.4%, down from the earlier projection of 4.8%. The World Bank attributes this slowdown to persistent domestic difficulties in China including the fading economic rebound following reopening, elevated debt levels, weakness in the property sector, and structural factors such as aging.
In contrast, the rest of the region is projected to see an uptick in growth to 4.7% in 2024. The World Bank believes that improved global conditions and easing financial constraints will counterbalance the impact of China’s slowing growth and trade policy measures in other countries.
The report emphasized China’s significant role in regional growth, stating that a 1% reduction in China’s growth could result in a regional slowdown of approximately 0.3 percentage points. However, excluding China, East Asia and Pacific are expected to see slightly faster growth in 2024 due to an improving global economy and a resurgence in foreign demand for the region’s manufactured goods and commodities.
Despite the generally positive outlook, the report warned of potential risks including geopolitical tensions and possible natural disasters such as extreme weather events.
In the same report, the World Bank maintained its economic growth forecast for Cambodia at 5.5% for 2023 and raised it to 6.1% for 2024. Cambodia’s growth is propelled by garment exports, tourism, agriculture, construction, and real estate sectors. Aaditya Mattoo, chief economist of the World Bank’s East Asia and Pacific Region, expressed optimism about Cambodia’s economic trajectory, citing recovery in the services sector, improvements in agricultural production, and potential boosts from foreign direct investment inflows due to new investment laws and ratified free trade agreements.
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