The World Bank has revised its growth forecasts for China and warned that developing economies in east Asia are projected to experience one of the slowest rates of expansion in the past five decades. This downgrade reflects concerns over China’s economic slowdown and its potential impact on the region. The bank now expects China’s economic output to grow by 4.4% in 2024, down from the 4.8% forecasted in April. It has also downgraded its 2024 forecast for GDP growth in developing economies in east Asia and the Pacific to 4.5%, signaling the region’s slowest pace of growth since the late 1960s.
The World Bank attributes the weaker growth projections to various factors, including weak indicators for the Chinese economy such as stagnant house prices and increased household debt. Furthermore, the bank highlights the impact of softer global demand, with exports of goods declining in multiple countries in the region. Rising levels of debt, both at the household and government level, have further constrained growth prospects. The bank emphasizes the need for deeper service sector reforms and a transition away from property- and investment-led growth for sustainable economic growth in the region.
The worsening forecasts also reflect the impact of new US trade policies under the Inflation Reduction Act and the Chips and Science Act. These policies have disrupted trade flows and affected southeast Asian countries that had benefited from US-China trade tensions in the past. Export levels of electronics and machinery have declined, particularly after President Joe Biden’s protectionist measures came into force. The World Bank underscores the discriminatory nature of these policies, which target countries not exempt from local content requirements. Southeast Asian countries are now seeking to fight back against these measures, calling for fair treatment and highlighting their critical role in global supply chains.