Next year will be (wee) better: World Bank

Next year will be (wee) better: World Bank

The World Bank report on East Asia, released today, has little to say about Singapore. But the good news is, China is beginning to turn the corner, says the report. "Economic activity in China is likely to bottom out by midyear" – and bounce back next year, perking up the rest of the region.

And the bad news: China alone can't bring about a full recovery. Say bye-bye to the go-go growth of the last few years. Jobs won't be as plentiful and well-paid.

The executive summary says:

A return to stronger economic expansion in China next year should help support growth among the countries of the East Asia and Pacific region, but a sustainable recovery will ultimately depend on developments in the advanced economies.

Among developing regions, East Asia is best positioned to benefit from resumption in global growth, given its relatively open trade regimes, its infrastructure, and its strong and competitive production networks.

Even so, the region’s outward oriented economies are unlikely to enjoy the same success in the medium term as they did in the previous decade, in large part because the pressure to increase savings in East Asia’s key export markets is likely to constrain their growth over the medium term. In addition, the risks to the outlook are weighted heavily on the downside. Continued banking problems or even new waves of tension in financial markets could lead to stagnation in global GDP or another year of declining GDP. The implications for East Asia would be increased pressure on labour markets and the fiscal accounts, and further deterioration in the portfolios of banks.

The World Bank is forecasting that real GDP growth in developing East Asia (including China but excluding the "newly industrialized economies" Singapore, Hong Kong, South Korea and Taiwan) will reach only 5.3 percent in 2009, down from 8 percent in 2008 and 11.4 percent in 2007.

But at least the region will continue to grow when global economic growth is expected to shrink by 1.7 percent this year—the first decline in world output since the World War II.

"East Asia has China to thank," says the Philippines' ABS-CBN News:

Thanks to China, the World Bank said growth in developing East Asia may be the fastest among the world's regions such as South Asia, Middle East, North America, and Sub-Saharan Africa.

If China is excluded, however, the World Bank said East Asia's performance is expected to trail behind the said regions.

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