World Bank cuts East Asia and Pacific growth
The World Bank in its latest forecast has trimmed the growth of the East Asia and Pacific region to 6.3% in 2016 and 6.2% in 2017. The bank had in October 2015 forecasted growth rates as 6.4% in 2016 and 6.3% in 2017. The decline in the growth rate mainly comes due to moderation in the growth rate in China.
The World Bank is a Washington-based international financial institution that was formed in 1944 as a result of the Bretton Woods Conference. Initially formed to help reconstruct the WW2 nations, the World Bank has evolved itself into a developmental institution which aims to eradicate extreme poverty and promote economic growth. It provides loans and expertise to developing nations to enhance their national income.
The World Bank periodically releases the forecast for the global economy. This helps investors and governments to taken preemptive actions agains any forseeable financial situations.
The World Bank highlighted various reasons for the decline in the growth rate projections. The most prominent among those was the faster than expected slowdown in Chinese economy which is adjusting to a new normal of consumption-led growth from export-led growth. An increase in financial market volatility and fall in commodity prices are the other reasons for the revision in growth forecast.
According to estimates by the World Bank, the GDP growth rate of the Chinese economy is likely to slow down from 6.9% in 2015 to 6.7% in 2016 and 6.5% in 2017.
The growth rate in the South East Asia's largest economy Indonesia will accelerate, subject to reforms, from 4.8% in 2015 to 5.1% in 2016 and 5.3% in 2017. While Malaysia will grow by 4.5% in 2016 and 5% in 2017 from 4.4% in 2015, Philippines will propel to 6.4% in 2016 from 5.8% in 2015. However, Thailand will continue with sub 3% growth rate.