BANGKOK: Asia Pacific economies are expected to slow this year due to uncertainty around U.S.-China trade tensions and slowdowns in major global economies could further hurt the region’s exports, a World Bank report said on Thursday.
Economic growth in the region is forecast to slip to 5.8% in 2019 from 6.3% in 2018.
The report highlights the weakening global demand and heightened uncertainty that led to a decline in exports and investment growth, and points out that increasing trade tensions pose a long-term threat to regional growth.
Countries with proximity to China as manufacturing centres will see limited benefit in the short term as trade tensions and global uncertainties intensify, the World Bank said.
“While companies are searching for ways to avoid tariffs, it will be difficult for countries in developing East Asia and the Pacific to replace China’s role in global value chains in the short term due to inadequate infrastructure and small scales of production,” said Andrew Mason, World Bank Lead Economist for East Asia and the Pacific.
The Washington-based lender said that faster-than-expected slowdowns in China as well as in Europe and the United States could further weaken demand for the region’s exports.
China’s growth is projected to slow to 6.1% this year, down from 6.6% in 2018, the report said.
For the long term, the World Bank said the ongoing U.S.-China trade dispute will increase the need for countries in the region to use fiscal or monetary measures to help stimulate their economies and undertake regulatory reforms to improve trade and attract investment.
The World Bank said that growth for East Asia and the Pacific is expected to slow to 5.7% in 2020 and 5.6% in 2021.