The World Bank is raising the growth forecasts for economies in East Asia and the Pacific region, following a sharp recovery in activity in China and because the region was not affected by the difficulties in the global banking system.
According to the updated forecast, the regional economy will grow this year by 5.1%, compared to a forecast published in October for growth of 4.6%. Last year, growth in the region was 3.5%. Regarding the Chinese economy, the World Bank raised the annual forecast for 2023 to a rate of 5.1% from 4.5% in the forecast six months ago. “The forecast assumes that the health sector, regulation and macroeconomic policy in China will support growth,” the report states. However, it was noted that a recovery in private consumption will lead to a “moderate” increase in inflation, which is expected to rise this year to 2.6% from 2% last year.
Regarding the fear of the spread of the crisis in the banking sector in the US and Europe, the World Bank claimed that the banking sector in East Asia and the Pacific “has not been affected yet, but there are potential risks due to direct or indirect exposure to losses.” Nevertheless, they concluded that “the health of the financial sector in East Asia and the Pacific is posture”.
According to the World Bank, the “immediate challenge” in the region is the growing tensions between the US and China. According to the report, it is politics that affects trade patterns and not economic conditions.
In a separate report published earlier this week, the World Bank warned that the “speed limit” of the global economy, meaning the maximum long-term growth rate to which it is possible to grow without igniting inflation, will be the lowest in three decades by 2030.
According to the forecasts, the average global GDP growth between 2022-2030 will fall to 2.2% per year, about a third of the average growth rate recorded in the first decade of the century. Stubborn poverty, income inequality and climate change,” said Indermit Gil, the chief economist of the World Bank. Therefore, he warned of a “lost decade” in the global economy.