World Bank cuts East Asia growth forecast to 7.1 per cent
8 Oct 2013 11:28 PM GMT
The World Bank on Monday lowered its 2013 growth forecast for East Asian developing countries to 7.1 per cent and warned that a prolonged US fiscal crisis could be damaging to the region. The estimate for this year's gross domestic product (GDP) growth is down from a forecast of 7.8 per cent in April, and lower than the 7.5 per cent growth recorded in 2012 and 8.3 per cent in 2011.
Regional GDP growth in 2014 and 2015 was forecast at 7.2 per cent for both years with middle-income economies like Indonesia, Malaysia and Thailand also softening. Excluding China, the region is expected to grow 5.2 percent in 2013 and 5.3 per cent in 2014.
Bert Hofman, the World Bank's East Asia and Pacific chief economist, told journalists that the bank was expecting a 'smooth resolution' of the budgetary impasse that has forced parts of the US government to shut down.
However, he added: "If there were to be a sustained deadlock, it could actually be quite damaging also for the East Asian economies. 'For every percentage point growth lost in the United States, we would see about half a percentage point growth lost in East Asia.'
The US impasse has raised fears US lawmakers will not increase the country's borrowing limit before an October 17 deadline, which could lead the government to default on its debts.
Regional GDP growth in 2014 and 2015 was forecast at 7.2 per cent for both years with middle-income economies like Indonesia, Malaysia and Thailand also softening. Excluding China, the region is expected to grow 5.2 percent in 2013 and 5.3 per cent in 2014.
Bert Hofman, the World Bank's East Asia and Pacific chief economist, told journalists that the bank was expecting a 'smooth resolution' of the budgetary impasse that has forced parts of the US government to shut down.
However, he added: "If there were to be a sustained deadlock, it could actually be quite damaging also for the East Asian economies. 'For every percentage point growth lost in the United States, we would see about half a percentage point growth lost in East Asia.'
The US impasse has raised fears US lawmakers will not increase the country's borrowing limit before an October 17 deadline, which could lead the government to default on its debts.
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