9 Oct 2012

World Bank slashes East Asia-Pacific growth

9:48 am on 9 October 2012

The World Bank has slashed its 2012 growth forecast for developing countries in East Asia and the Pacific to 7.2 per cent, down from 8.3 per cent in 2011, due to the fragile global economy.

The bank's chief regional economist, Bert Hofman, says it will be the slowest growth rate in the region since 2001, even slower than the peak of the financial crisis in 2009.

Gross domestic product growth should rebound to 7.6 per cent in 2013, driven by domestic demand, but it's warned a worsening of the eurozone debt crisis, problems in the United States and a further slowdown in China are major risks.

The region covered by the new forecast includes Fiji, Papua New Guinea, the Solomon Islands, China, Indonesia, the Philippines, and East Timor.

Domestic demand is expected to drive growth in East Asia and the Pacific next year, making up for muted trade growth as major markets Europe and the United States bought less of the region's exports.

The bank however warned that the projected rebound is fraught with risks, among them the debt crisis gripping the eurozone.