As China, the world's second-largest economy, struggles with a real estate crisis and the government's zero-tolerance stance to COVID-19, the World Bank predicted that developing countries in East Asia will expand faster than China in 2022 for the first time since 1990.
The World Bank, based in Washington, D.C., lowered its forecast for China’s growth in 2022, but stated that it anticipates growth among 22 neighboring economies to more than double in 2022 compared to the pace they recorded in 2021. This is because countries will benefit from the lifting of most restrictions related to COVID-19 and a revival in tourism.
Central banks such as the US Federal Reserve raise interest rates more aggressively than investors anticipate them to prevent inflationary impulses, according to the bank, which threatens the outlook for the area. According to the report, this could affect the global economy and increase financial stress in highly indebted emerging countries.
China, Southeast Asian economies such as Malaysia and Indonesia, and Pacific islands such as Samoa and Tonga are also included in the coverage area of the report. It covers 23 countries, but advanced economies in Asia such as South Korea, Singapore and Japan are excluded. China’s GDP increased significantly in 2022 when compared to that in 2021, according to GlobalData.
Even while the demand for Asian goods in the West is on the wane, some of those economies are still smaller than they were before the pandemic, highlighting the possibility of ongoing internal development to narrow the gap. According to the World Bank, output in Cambodia, the Philippines, and Thailand could exceed pre-pandemic levels in 2022.
Most countries, it claimed, had manageable finance needs and relatively low debt loads. However, some could be subject to pressure as a stronger dollar and increasing interest rates increase the cost of debt servicing, a particularly painful combination for countries such as Laos and Mongolia that have foreign currency borrowings, the World Bank said.
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