Growth in East Asia and the Pacific is expected to slow to 3.2% from 7.2% in 2021, the World Bank has said. According to the World Bank’s East Asia and Pacific October 2022 Economic Update, the growth in developing East Asia and the Pacific outside of China is expected to rise by 5.3% in 2022 from 2.6% in 2021. China, which earlier led the recovery in the region is forecast to grow by 2.8% in 2022 from 8.1% in 2021. Meanwhile, the report forecasts economic growth in East Asia and the Pacific will accelerate by 4.6% next year.
The World Bank noted that the growth in most of developing East Asia and the Pacific rebounded in 2022 from the impacts of COVID-19. However, it pointed out that China has “lost momentum” due to its COVID-19 restrictions to contain the virus. Notably, China has been following zero COVID policy since the onset of the pandemic. Earlier, Organisation for Economic Co-operation and Development had also noted that Beijing’s zero COVID-19 policy’ has affected the Chinese and global economy and predicted China’s slowdown to 3.2% in 2022.
According to the statement issued by the World Bank, the growth in much of East Asia and the Pacific has been driven by a recovery in domestic demand as restrictions related to COVID-19 have been eased and an increase in exports. Meanwhile, China, which accounts for around 86% of the region’s output has been imposing restrictions to contain the COVID-19 virus which as per the World Bank is “inhibiting economic activity.”
Economic recovery ‘underway’ in most nations of East Asia & Pacific: Ferro
According to the report, the global economic slowdown has started to “dampen” demand for exports of commodities and goods. Inflation has led to an increase in interest rates which in turn has resulted in capital outflows and currency depreciations in some East Asia and Pacific nations. The World Bank stated that the economic situation of the region could be compromised due to slowing global demand, rising debt and dependence on short-term economic fixes in the face of a rise in food and fuel price. It further said, “As countries of the region seek to shield households and firms from higher food and energy prices, current policy measures provide much-needed relief, but add to existing policy distortions.” Manuela V Ferro, World Bank East Asia and Pacific Vice President, in the statement noted that the economic recovery is ongoing in most nations of East Asia and the Pacific.
“Economic recovery is under way in most countries of East Asia and the Pacific,” Manuela V Ferro said. “As they prepare for slowing global growth, countries should address domestic policy distortions that are an impediment to longer term development,” Ferro added.