The World Bank (WB) said the economy of East Asia and the Pacific, excluding China, could grow to 4.6 percent this year from 4.4 percent last year as the region navigates the impacts of climate change, uncertain economic policies, and uneven digital growth.

“The East Asia and Pacific region is making a strong contribution to world economic growth, even as it faces a more challenging and uncertain global environment, an aging population and the impacts of climate change,” World Bank East Asia and Pacific vice president Manuela V. Ferro said.

The World Bank said climate change could reduce crop yields in the region’s developing countries as inefficient agriculture, forestry, and land use systems raise their share of global carbon emissions by over 25 percent.

It added that the region will continue to face trade disruptions as some countries are still trying to resolve geopolitical issues with China, such as the territorial claims of Southeast Asian nations in the South China Sea.

Specifically, the WB projected China’s economy to contract to 4.5 percent from 5.2 percent last year due to “high debt, a weak property sector, and trade frictions.”

Similarly, the economic growth of Pacific Island countries will likely slow to 3.6 percent from 5.6 percent.

The World Bank said the region’s economic growth will also be restrained by the much lower productivity of smaller firms amid technological advancements.

“Because new technologies typically gain traction first among leading firms and cascade later to other businesses, this trend raises concerns across the business spectrum,” it said.

To address this problem, the World Bank suggested higher investments in upskilling teachers and other workers.

“Bold policy action to unleash competition, improve infrastructure, and reform education could revitalize the region’s economy,” World Bank East Asia and Pacific chief economist Aaditya Mattoo said.