The World Bank raises growth forecasts for 2023 in developing East Asia as China reopens

The Washington-based bank said in a report that it expects growth in the region, which includes 23 countries, including China, to rise to 5.1%, up from 3.5% last year.

The strongest forecast is due to the reopening of China, which would see that country’s economy grow from 3% last year to 5.1%, according to the World Bank.

Developing countries in East Asia and the Pacific include Vietnam, the Philippines, Malaysia, Indonesia, Thailand, and Mongolia, as well as island nations such as Fiji, Vanuatu, and Palau.

Excluding China, growth in the region is expected to slow to 4.9%, after rebounding to 5.8% in 2022, as inflation and high household debt weigh on consumption in some countries.

“Most of the major economies in East Asia and the Pacific have overcome the challenges of the pandemic, but are now navigating a changing global landscape,” said Manuela Ferro, World Bank Vice President for Regions.

“To regain momentum, there is still work to be done to drive innovation and productivity and lay the foundations for a greener recovery.”

According to the lender, the most pressing challenge is the growing divide between China and the United States.

Most dangerous, she says, are bilateral restrictions on technology flows and cooperation that could limit global access to knowledge.

“While China remains small compared to developed economies such as the United States, it has become an increasingly important source of knowledge for innovation in other East Asia and Pacific countries,” the report said.

The multilateral aid agency has suggested that countries reform their policies to increase growth and participate in international agreements with both China and the United States rather than being part of an exclusive trading bloc.