World Bank cuts 2012 East Asia and Pacific GDP growth to 7.2%

08 October 2012 06:22  [Source: ICIS news]

SINGAPORE (ICIS)--Economic growth in east Asia and the Pacific region is expected to decelerate to 7.2% this year amid a fragile external environment, with risks of a more pronounced slowdown in China, the World Bank said on Monday.

The growth projection represents a full percentage-point fall from the actual economic expansion in the region in 2011, the multilateral institution said in its East Asia and Pacific Economic Data Monitor report.

A slight recovery is expected in 2013, with the region’s GDP growth seen at 7.6%, it said.

“Weaker demand for East Asia’s exports is slowing the regional economy, but compared to other parts of the world, it’s still growing strongly, and thriving domestic demand will enable the region’s economy to bounce back to 7.6% next year,” World Bank Group president Jim Yong Kim said.

Exports growth for East Asia as a whole slowed to 4.5% year on year in the second quarter of this year, easily outpaced by import growth of 5.2%, with trade no longer contributing to the region’s growth, according to the World Bank.

With the exception of China and Vietnam, all of the other major economies in the region saw a decline in exports in the second quarter, a sharp dip from the 15–20% growth rates seen last year, it said.

Meanwhile, weak exports and lower investment growth will slow down China’s GDP growth to 7.7% this year from 9.3% in 2011, it added.

“Investment growth [in China] has slowed in particular, driven by last year’s measures to rein in investments in real estate, according to the World Bank.

“However, relaxation in monetary policy earlier this year and local and central government stimulus measures could again reverse this trend in months to come,” it said.

China’s growth is expected to rebound to 8.1% next year as the impact of recent stimulus measures kicks, supported by higher growth in global trade, according to the World Bank.

China’s overall domestic demand growth fell in the first half of this year, contributing 8.4% to growth through the second quarter, compared to 9.7% a year earlier, it said.

The slowdown in demand was reflected in industrial production growth, which dipped below 9% year on year in August, down from 13.5% in the same period last year, it added.

China’s official purchasing managers’ index (PMI) in September rose to 49.8% from 49.2% in August. While the number increased, it remained below 50%, indicating contraction in manufacturing output. The country’s official PMI has been below 50 since July this year.

By: Nurluqman Suratman

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