Growth in East Asia and the Pacific, including the Philippines, for this year will remain resilient even if its lower at 6.3 percent from 6.5 percent in 2015, according to a recent World Bank (WB) report.
The report also said the growth is expected to ease only modestly during 2016-18 (WB) report.
Among the large developing Southeast Asian economies, the Philippines and Vietnam have the strongest growth prospects, both expected to grow by more than six percent in 2016.
Buoyed by strong private consumption and election spending, the Philippines is projected to grow 6.4 percent in 2016 before tempering slightly to 6.2 percent in 2017.
In Indonesia, growth is forecast at 5.1 percent in 2016 and 5.3 percent in 2017, contingent on the success of recent reforms and implementation of an ambitious public investment program.
Growth in developing East Asia is expected to ease from 6.5 percent in 2015 to 6.3 percent in 2016 and 6.2 percent in 2017-18.
The forecast reflects China’s gradual shift to slower, more sustainable growth, expected to be 6.7 percent in 2016 and 6.5 percent in 2017, compared with 6.9 percent in 2015.
“Developing East Asia and the Pacific continues to contribute strongly to global growth. The region accounted for almost two-fifths of global growth in 2015, more than twice the combined contribution of all other developing regions,” said Victoria Kwakwa, incoming World Bank East Asia and Pacific regional vice president, in the report.
“The region has benefited from careful macroeconomic policies, including efforts to boost domestic revenue in some commodity-exporting countries. But sustaining growth amid challenging global conditions will require continued progress on structural reforms.”
The latest report examines the region’s growth prospects against a challenging backdrop: slow growth in high-income countries, a broad slowdown across emerging markets, weak global trade, persistently low commodity prices and increasingly volatile global financial markets.
Not including China, the region’s developing countries grew by 4.7 percent in 2015, and the pace of growth will pick up slightly – to 4.8 percent in 2016 and 4.9 percent in 2017-18 – driven by growth in the large Southeast Asian economies.
However, according to the Bank, the outlook for individual countries varies, depending on their trade and financial relationships with high-income economies and China, as well as their dependence on commodity exports.
Several small economies, including Lao PDR, Mongolia, and Papua New Guinea, will continue to be affected by low commodity prices and weaker external demand.
Cambodia’s growth will be slightly below seven percent during 2016-18, reflecting weaker prices for agricultural commodities, constrained garment exports and moderating growth in tourism. In the Pacific island countries, growth is likely to remain moderate.
“Developing East Asia and Pacific face elevated risks, including a weaker-than-expected recovery in high-income economies and a faster-than-expected slowdown in China. At the same time, policy makers have less room to maneuver in setting macroeconomic policy,” said Sudhir Shetty, chief economist of WB’s East Asia and Pacific Region.
“In the recent years, the Philippines has continued to deepen macroeconomic stability, promoted transparency and put a lot of resources in infrastructure and services that helped poor and vulnerable families,” said Mara Warwick, WB country director for the Philippines.
Across the region more generally, there is a growing need for prudent fiscal policy to guard against future external shocks.
This is especially important in those economies where growth has been sustained through increased public or private sector borrowing, or where external demand has been supported by the commodities boom.
Over the longer term, the report calls for governments to boost transparency and strengthen accountability. WB also urged countries to reduce barriers to regional trade, such as non-tariff measures and regulatory barriers, including to trade in services.