FILE shoppers visit a popular retail street in Beijing on Saturday, February 26, 2022. The World Bank said on Friday, March 31, 2023 that developing economies in Asia have mostly regained ground lost during the Pandemic but are seeing their recoveries stall as productivity lags. AP Photo Ng Han Guan, File ASSOCIATED PRESS BANGKOK AP - Developing economies in Asia have mostly regained ground lost during the Pandemic but are seeing their recoveries stall as productivity lags, the World Bank said in a report released Friday.
The report predicts that growth in the region including China will pick up pace this year after the world's No. The 2 economy relaxed travel restrictions on travel and other activities due to the pandemic. It said that recoverys elsewhere in the region, including China, will moderate as pressures of inflation and growing household debt slow consumer spending.
The report said that the growth of economies in the Asia-Pacific is expected to grow at a 5.1% annual pace this year, up from 3.5% in 2022. Growth is expected to be down to 4.9% in 2023, after a rebound from the worst of the Pandemic of 5.8% in 2022, it said.
Major Asian economies like Indonesia, Philippines, Thailand and Vietnam will see their recoveries slow and will face risks from weak global growth, spillover from the war in Ukraine and climate change disasters.
Demand for exports from the region has slowed as the Federal Reserve and other central banks have targeted inflation by hiking interest rates, making it more costly to buy credit or get mortgages.
Even as it bounces back from the disruptions caused by the Pandemic, China's economy has slowed significantly in the long term.
Private economists have cut their forecasts for growth this year, citing the possibility that tighter monetary policies could lead to recessions in the U.S. or other major economies. Many countries in the region are struggling with onerous debt loads after spending heavily during the epidemic, while households also borrowed heavily.
As demand from post-lockdown fades, we think Asian economies will settle at lower GDP growth and higher inflation than our pre-pandemic forecasts, Sung Eun Jung, of Oxford Economics, said in a report.
The World Bank said that the region has made huge strides in reducing poverty, but progress toward higher incomes and reducing inequality has stalled due to a slowing of reforms and productivity gains. Most major economies of East Asia and the Pacific have come through the difficulties of the epidemic but must now navigate a changed global landscape, according to World Bank East Asia and Pacific Vice President Manuela V. Ferro. There is still work left to do to boost innovation, productivity, and set the foundations for a greener recovery.