Growth in developing East Asia remains resilient and the outlook for the region is broadly positive, the World Bank said in its East Asia Pacific Economic Update, released Thursday.
The Washington-based lender forecast the economies of developing East Asia and Pacific to expand at 6.2 percent this year before slowing slightly to 6.1 percent in 2018.
The growth is forecast to be driven by strong domestic demand. This trend will also be underpinned by gradually rising demand for exports, the lender noted.
China's growth is projected to continue easing steadily, to 6.5 percent this year and 6.3 percent in 2018-19. The moderation in growth reflects the impact of the government's measures to reduce excess capacity and credit expansion, the bank observed.
In the short term, the World Bank said policy makers should prioritize measures that counteract global risks threatening the availability and cost of external finance, as well as export growth.
The lender observed that the global environment and domestic vulnerabilities still pose risks to the region's prospects.
Faster-than-expected interest rate hikes in the U.S.; protectionist sentiments in some advanced economies; and rapid credit expansion and high levels of debt in several East Asian countries are some of the risks to outlook, the World Bank noted.
The lender recommended policymakers to focus on prudent macroeconomic management to address these risks. Also, the bank advised authorities to ensure sustainable fiscal balances in the medium-term.
Across the region's large economies, increasing fiscal revenues can help governments finance programs that boost growth and foster inclusion while reducing risks to fiscal sustainability.
The World Bank said in the face of rising protectionism outside the region, East Asia can seize opportunities to advance regional integration.
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