World Bank Cut Growth Forecast For East Asia And China

Posted by: : Paul EbelingPosted on: April 13, 2015 World Bank Cut Growth Forecast For East Asia And China

World Bank Cut Growth Forecast For East Asia And China

The World Bank cut its Y 2015 growth forecasts for developing East Asia and China, and warned of “significant” risks from global uncertainties including the potential impact from a strengthening dollar and higher U.S. interest rates.

The Washington-based lender expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.7% in each of Ys 2015 and 2016, down from 6.9% growth in Y 2014.

China’s growth is likely to slow due to policies aimed at putting its economy on a more sustainable footing and tackling financial vulnerabilities, the World Bank said in its latest East Asia and Pacific Economic Update report Monday.

The World Bank said China’s economy is likely to slow to 7.1% in 2015 and 7.0% in Y 2016, from 7.4% in Y 2014. The prior forecast was for growth of 7.2% in Y 2015 and 7.1% in Y 2016.

While the impact of low oil prices will vary from country to country, the World Bank said the prospect of a sustained period of low Crude Oil costs will help underpin growth in the region, as will an expected improvement in high-income economies.

However, due to uncertainties in the global economy, there are “significant risks” to the regional outlook, it added.

“Higher US interest rates and an appreciating US Dollar, associated with monetary policy divergence across the advanced economies may raise borrowing costs, generate financial volatility, and reduce capital inflows more sharply than anticipated,” the World Bank said.

Any downturn in Japan and the Euroarea would dent the region’s exports, it said. Another risk is a significant slowdown in China, although that is unlikely since the world’s 2nd-biggest economy enjoys policy buffers including large foreign reserves, and ample fiscal room to deploy stimulus or bail out debtors, the report added.

China’s central bank has cut interest rates 2X since November in a bid to spark an economy growing at its slowest pace in decades.

Growth in developing East Asia and Pacific excluding China is expected to accelerate to 5.1% in Y 2015 and 5.4% in Y 2016, up from 4.6% in Y 2014, the World Bank said.

Malaysia, the region’s largest Crude Oil-exporter, is likely to see growth slow in Y 2015, as low Crude Oil prices hit capital spending in the energy sector and private consumption cools due to the implementation of the goods and services tax in April, the World Bank said.

Stay tuned…


Paul Ebeling

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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

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