World Bank cuts East Asia-Pacific growth

SINGAPORE - Agence France-Presse

An unidentified man works on a construction site in Jakarta, Indonesia. EPA photo

The World Bank yesterday slashed its 2012 growth forecast for developing countries in East Asia and the Pacific to 7.2 percent, dragged down by China’s worst economic performance in 13 years.

It said China’s economy would grow just 7.7 percent this year, down from 9.3 percent in 2011 and its slowest rate since 1999, but added that stimulus measures would help push it back above the crucial 8.0 percent mark in 2013.

The 2012 gross domestic product (GDP) projections in a report called the East Asia and Pacific Data Monitor were down from a May forecast of 7.6 percent growth in the region and 8.2 percent in China.
The report comes as the Washington-based World Bank and International Monetary Fund prepare to hold their annual meetings at the end of the week. The Group of Seven advanced economies will also meet to discuss the global outlook.

Despite the downgraded numbers, Bert Hofman, the World Bank chief economist for East Asia and the Pacific, said: “Our main forecast is still that China will have a soft landing.” He also told journalists in Singapore that while there is a risk of a major slowdown, “we think it’s small, not least because of the policy space that the authorities still have and the likelihood that they will indeed use it.

“They have enough fiscal space, they still have some monetary space so they could revamp the economy... if and when needed.” Hofman noted that China was being hit by a “double whammy” of an export slowdown and softer domestic demand.

The World Bank also cut its growth forecast for Russia because of recent drought and inflation, in a tough assessment which urged more investment.

The bank lowered the outlook for this year by 0.4 percentage points to 3.5 percent of gross domestic product (GDP).