Prudent Macroeconomic mgt key to development in East Asia and Pacific – World Bank

Economic development in East Asia and Pacific have been projected to remain broadly positive in the next three years with poverty in the region  likely to continue to fall, the World Bank has said.

According to a new World Bank report, positive development will be driven by robust domestic demand and a gradual recovery in the global economy and commodity prices. While sustained growth and rising labour incomes will see poverty level dropped.

The newly released East Asia and Pacific Economic Update recommends that policy makers continue to focus on prudent macroeconomic management and ensuring sustainable fiscal balances in the medium term as the global environment and domestic vulnerabilities still pose risks to the region’s prospects.

It mentioned factors such as the faster-than-expected interest rate hikes in the U.S., protectionist sentiments in some advanced economies, and rapid credit expansion and high levels of debt in several East Asian countries as potential threats.

The report also expects the Chinese economy to continue to slow down gradually, as it rebalances toward consumption and services. It forecasts China’s growth rate to be 6.5 percent in 2017 and 6.3 percent in 2018, compared with 6.7 percent in 2016.

In the rest of the region, including the large economies in Southeast Asia, growth is expected to pick up slightly to 5 percent in 2017 and 5.1 percent in 2018, up from 4.9 percent in 2016. As a whole, the economies of developing East Asia and Pacific are projected to expand at 6.2 percent in 2017 and 6.1 percent in 2018.

“Sound policies and a gradual pickup in global economic prospects have helped developing East Asia and Pacific sustain growth and reduce poverty,” said Victoria Kwakwa, World Bank Vice President for East Asia and Pacific.

“For this resilience to be sustained, countries will need to reduce fiscal vulnerabilities while improving the quality of public spending and fostering global and regional integration.”