Vietnam and the Philippines will lead growth in Asia this year, and China will remain the main driver of that growth even as its economy slows, the World Bank said in a report Monday.
East Asia will grow 6.3% this year, down from 6.5% in 2015, as both the Philippines and Vietnam expand by more than 6%, according the forecast from the US-led development bank.
Indonesia, the biggest economy in Southeast Asia, is expected to grow by 5.1% in 2016 and 5.3% in 2017.
In 2015, developing East Asia and the Pacific accounted for almost two-fifths of global growth, more than twice the combined contribution of all other developing regions, said Victoria Kwakwa, incoming World Bank East Asia and Pacific Regional Vice President according to the Associated Press.
“The region has benefited from careful macroeconomic policies, including efforts to boost revenue in commodity-exporting countries,” she said. “But sustaining growth amid challenging global conditions will require continued progress on structural reforms.”
China, which saw economic growth of 6.9% last year, is experiencing and slower growth as the world’s second-biggest economy shifts away from being export based to one supported by consumer spending. For this year, the World Bank expects growth of 6.7% and 6.5% in 2017.
This estimate could come in lower than expected if the global demand continues to weaken. In addition, China needs to worry about high levels of debt, price deflation, and high corporate and household debt.
The World Bank report urged China to continue reforms of its restrictive household-registration system, and to shift public spending from infrastructure toward public services including education, health, social assistance and environmental protection.
Asia’s smaller economies, including Laos, Mongolia, and Papua New Guinea will continue to be affected by low commodity prices and weaker external demand.
The banks expects Cambodia to growth about 7% in 2016-2018 due to weaker prices for agricultural commodities, constrained garment exports, and moderating growth in tourism.