Regional economies slowing down — WB
The multinational financial institution said the region might continue to face challenges in supplies of goods as more typhoons hit the region in the fourth quarter this year and climate change persists
Daily TribuneThe multinational financial institution said the region might continue to face challenges in supplies of goods as more typhoons hit the region in the fourth quarter this year and climate change persists
The World Bank expects East Asia and Pacific economies, excluding China, to grow by 4.6 percent this year as the Philippines catches up with digitalization.
The WB prediction is slower than the previous 4.9 percent estimate announced by the multinational financial institution in April. If China is included, economic growth in the region is projected to settle at five percent, the World Bank's report from Washington said last Sunday.
"This is higher than average growth projected for all other emerging market and developing economies but lower than previously projected," the World Bank said.
"The East Asia and Pacific region remains one of the fastest growing and most dynamic regions in the world, even if growth is moderating," World Bank East Asia and Pacific vice president Manuela Ferro said.
The multinational financial institution said the region might continue to face challenges in supplies of goods as more typhoons hit the region in the fourth quarter this year and climate change persists.
Geopolitical tensions
The World Bank added geopolitical tensions aside from the Russia-Ukraine war threatens to further hamper trade.
China, the world's second largest economy, and the US have been exchanging export bans, especially on electronic and technology products.
Meanwhile, the Philippines and other Southeast Asian states are protesting against China's aggression in the West Philippine Sea.
For these reasons, the World Bank said prices of goods and services might rise, forcing central banks in the region's developing countries to raise interest rates to prevent inflation from accelerating further.
However, this means consumers might cut back spending on certain goods and services, while businesses slow operations.
Borrowing costs to remain high
"Therefore, borrowing costs will likely remain high, constraining room for spending and raising the risk of debt distress in some countries. Furthermore, high indebtedness, combined with rising costs of servicing debt, will weigh on private investments," the World Bank said.
For its 2024 forecast, the bank is more optimistic that the region's economy excluding China's will expand from 4.6 percent to 4.7 percent.
"Growth in the rest of the region is expected to edge up, as recovery in global growth and easing of financial conditions offsets the impact of slowing growth in China and trade policy measures in other countries," the World Bank said.
Philippine economic growth is seen to improve to 5.9 percent next year from a 5.6 percent forecast for this year.
Meanwhile, China's economy could shrink by 4.4 percent next year from a 4.8 percent estimate for 2023 due to persisting elevated debt, tamer demand for real estate, and aging population.
Sustaining high growth to require reforms
"Over the medium term, sustaining high growth will require reforms to maintain industrial competitiveness, diversify trading partners, and unleash the productivity-enhancing and job-creating potential of the services sector," Ferro said.
The World Bank reported digitalization and other reforms in government services in the Philippines increased productivity of firms by 1.5 percent from 2010 to 2019.
Digital technologies, for example, can spread education and health services in the provinces to ensure a bigger pool of high-skilled and energetic workers.
