World Bank Predicts 5.1% Growth In East A-PAC For 2023

Growth in developing East Asia and the Pacific is expected to accelerate to 5.1 percent in 2023, up from 3.5 percent in 2022, as China's reopening helps the economy recover to 5.1 percent from 3% last year, according to the World Bank.

According to the World Bank's East Asia and Pacific April 2023 Economic Update, while regional economic performance is strong, it may be hampered this year by slowing global growth, rising commodity prices, and tightening financial conditions in response to persistent inflation.  

Growth in the region outside of China is expected to slow to 4.9 percent in 2022, from 5.8 percent in 2022, as inflation and high household debt in some countries weigh on consumption.  

"Most major East Asian and Pacific economies have overcome the challenges of the pandemic but must now navigate a changed global landscape," said World Bank East Asia and Pacific vice president Manuela V Ferro. "There is still work to be done to boost innovation and productivity, as well as lay the groundwork for a greener recovery."

Most of the region's larger economies, including Indonesia, the Philippines, and Vietnam, are expected to grow more slowly in 2023 than in 2022. Most Pacific Island countries are expected to grow faster in 2023, but Fiji's exceptionally fast economic growth in 2022 is expected to slow.

Most EAP countries have experienced higher and more stable growth than economies in other regions over the last two decades.  As a result, poverty has decreased dramatically, as has inequality over the last decade. However, as productivity growth and the pace of structural reforms have slowed, the catch-up to advanced economies' per capita income levels has stalled in recent years. Addressing the significant'reform gap,' particularly in services, could amplify the impact of the digital revolution and boost productivity in industries ranging from retail and finance to education and health, according to the World Bank.

The region's economies must also deal with three major challenges as policymakers work to sustain and accelerate economic growth in the aftermath of COVID-19. Rising tensions between major trading partners will have an impact on regional trade, investment, and technology flows. The rapid ageing of East and Southeast Asia's major economies heralds a new set of challenges and risks with implications for economic growth, fiscal balances, and health. Finally, because of the high density of population and economic activity along its coasts, the region is particularly vulnerable to climate risks. 

“De-globalisation, aging, and climate change are casting a shadow over the growth prospects of a region that has thrived through trade and is growing old fast,” said World Bank East Asia and Pacific chief economist Aaditya Mattoo. “However, promoting trade, addressing population dynamics, and enhancing climate resilience could strengthen growth.”