World Bank- East Asia and Pacific Economic Update

The growth forecasts for the Pacific and East Asia have been lowered by the World Bank in its latest economic update. The forecasts have been lowered to 5 per cent from 5.4 per cent that was forecasted in October 2021.

Overview:

• The World Bank has also warned that growth could slow to 4 per cent if the conditions weaken further.
• The latest economic outlook has highlighted a hit to this region due to the ongoing Russia-Ukraine crisis.
• Also, China’s slow growth along with rising rates in the United States is affecting this region.
• Also, the ongoing negative effect on the supply chain across the globe is also affecting the manufacturers which are causing an increase in the prices.

What does this report say about China?

China accounts for 86 per cent of this region’s output and has been tipped to grow by 4 per cent in the downside scenario and 5 per cent in its baseline scenario according to the World Bank. Output for the rest of the region is expected to grow by 4.8 per cent in the baseline scenario and by 4.2 per cent in the downside scenario. This is going to cause 6 million people to remain trapped in poverty.

About Regional Firms

According to this report, the regional firms reporting payment arrears will be hit by new demand and supply shocks. Also, the real income will shrink for the households as inflation rates will increase.

Recommended policy response

The World Bank has recommended policy responses that include targeted support for firms and households in order to mitigate and limit the after-effects of the economic shocks. Space for investment should also be created, and financial institutions should be able to identify risks. Trade-related reforms should also be made and skills should be improved. Also, adoption of new digital technologies must also be looked into.

Month: Current Affairs - April, 2022

Category: Economy & Banking Current Affairs