The October edition reports that the uptick in growth in 2017 relative to earlier expectations reflects stronger than expected growth in China, at 6.7%, the same pace as in 2016. In the rest of the region, including the large Southeast Asian economies, growth will be slightly faster at 5.1% in 2017 and 5.2% in 2018, up from 4.9% in 2016.
The Bank has maintained its 2017 GDP growth forecast for Vietnam at 6.3% (constant price), while stronger growth in advanced economies, a moderate recovery in commodity prices, and a recovery in global trade growth, are the favorable external factors that will support the economies of developing East Asia and Pacific to expand by 6.4% for 2017.
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“The recovery of the global economy and the expansion of global trade are good news for the East Asia and Pacific region and its continued success in improving living standards. The challenge will be for countries to strike a balance between prioritizing short-term growth and reducing medium-term vulnerabilities, so that the region has a stronger foundation for sustained and inclusive growth”, said Ms Victoria Kwakwa, World Bank Vice President for the East Asia and Pacific Region.
Thailand and Malaysia are expected to grow more rapidly than expected, due to stronger exports, including tourism, for the former, and increased investment in the latter. Gains in real wages are fueling strong consumption in Indonesia, and a rebound in agriculture and manufacturing is boosting growth in Vietnam.
Structural reform priorities differ across countries. Sustained reforms of the State-owned enterprise sectors in Vietnam and China can improve growth prospects. The Philippines, Thailand, Lao PDR and Cambodia will benefit from continued improvements in public investment management systems to support expanding public infrastructure programs.
The report also highlights the potential that tourism development and deeper regional integration offer to offset the risks of protectionism. Growth in tourism, if well managed, has the potential to yield substantial benefits to the region, including for the Pacific island nations.
The ASEAN Economic Community offers one avenue for promoting further regional integration, including by further liberalizing trade in services and reducing non-tariff barriers.
Despite success in reducing poverty, high and rising inequality is a growing concern, as are falling mobility and growing economic insecurity. For lasting inclusive growth, measures to reduce extreme poverty must be accompanied by policies that broaden access to quality services and more productive jobs, and stronger social protection systems that reduce the consequences of adverse shocks./.