World Bank trims China, East Asia 2014-2016 growth forecasts

Mon Oct 6, 2014 1:09am EDT
 
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By Masayuki Kitano

SINGAPORE (Reuters) - The World Bank cut its 2014-2016 growth forecasts for developing East Asia, noting that China was likely to slow due to policies aimed at putting the economy on a more sustainable footing, and it also cautioned of capital-flight risks to Indonesia.

The Washington-based lender expects the developing East Asia and Pacific (EAP) region to grow 6.9 percent in 2014 and 2015, down from the 7.1 percent rate it had previously forecast for both years. Growth in 2013 had been 7.2 percent.

The bank also trimmed its 2016 growth forecast for the region to 6.8 percent from 7.1 percent.

"The main message of this report is one that I would categorize as cautious optimism," World Bank East Asia and Pacific Chief Economist Sudhir Shetty said at a media briefing on Monday on the latest East Asia Pacific Economic Update.

Possible risks to the outlook include a weaker-than-expected recovery in global trade and any abrupt rise in global interest rates, the report said, adding that its baseline scenario was based on an orderly normalization of monetary policy in the United States.

The World Bank said growth in China was likely to slow to 7.4 percent in 2014 and 7.2 percent in 2015, down from 7.7 percent in 2013. Growth in 2016 was seen at 7.1 percent.

The World Bank had previously seen China's growth coming in at 7.6 percent in 2014 and 7.5 percent in 2015 and 2016.

"Measures to contain local government debt, curb shadow banking, and tackle excess capacity, high energy demand, and high pollution will reduce investment and manufacturing output," it said regarding China's outlook.   Continued...

 
Vendors sit outside a shop selling clothes in Hanoi October 3, 2014. REUTERS/Kham