Better global prospects provide positive outlook for developing Pacific

Business

IMPROVED global growth prospects and continued strong domestic demand underpin a positive outlook for the developing economies of East Asia and the Pacific, a World Bank report on the region says.
Stronger growth in advanced economies, a moderate recovery in commodity prices, and a recovery in global trade growth, are the favourable external factors that will support the economies of developing East Asia and Pacific to expand by 6.4 per cent for 2017.
The October 2017 edition of the “East Asia and Pacific Economic Update” reports that the uptick in growth in 2017 relative to earlier expectations reflects stronger than expected growth in China, at 6.7 per cent, the same pace as in 2016.
In the rest of the region, including the large Southeast Asian economies, growth in 2017 will be slightly faster at 5.1 per cent in 2017 and 5.2 per cent in 2018, up from 4.9 per cent in 2016.
Several external and domestic risks could impact this positive outlook. Economic policies in some advanced economies remain uncertain, while geopolitical tensions centred on the region have increased.
Monetary policies in the United States and the Euro area could be tightened more quickly than expected.
Many countries in the region have high levels of private sector debt while fiscal deficits remain high or are on the rise.
Victoria Kwakwa, World Bank vice-president for the East Asia and Pacific region, said: “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 prioritising short-term growth and reducing medium-term vulnerabilities, so that the region has a stronger foundation for sustained and inclusive growth.”
China’s gradual rebalancing away from investment and towards domestic consumption is expected to continue, with growth projected to slow to around 6.4 per cent in 2018.
The outlook for smaller countries is mixed.
Mongolia and Fiji are expected to fare better in 2017-2018.
Mongolia’s macro-economic stabilisation programme is encouraging new foreign direct investment in mining and transport.
Fiji’s growth will be supported by reconstruction from Cyclone Winston.

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