SINGAPORE — The World Bank said Monday developing countries in East Asia will record economic growth of 7.1 percent in 2014, as they benefit from a stabilizing global economy and withstand the impact of US stimulus cuts. The estimate for gross domestic product (GDP) expansion remains unchanged from last year, making East Asia the world’s fastest-growing region, the bank said in its East Asia and Pacific Economic Update report. However, the 7.1 percent forecast growth rate for this year represents a slowdown from an average growth rate of 8.0 percent from 2009 to 2013. Growth in regional powerhouse China will ease to 7.6 percent from 7.7 percent as it undergoes structural reforms. Excluding China, the developing countries in the region will grow by 5.0 percent, down from 5.2 percent last year.
“East Asia Pacific has served as the world’s main growth engine since the global financial crisis,” said Axel van Trotsenburg, World Bank East Asia and Pacific regional vice president. “Stronger global growth this year will help the region expand at a relatively steady pace while adjusting to tighter global financial conditions,” he added in a statement.
The bank said the region’s reaction to the U.S. Federal Reserve’s decision to begin scaling back its quantitative easing program demonstrated how “flexible currencies will help East Asia deal with external shocks including potential capital-flow reversals.” “In addition, most countries have adequate reserves to cover temporary trade and external shocks,” it said.
Despite a major sell-off in emerging markets earlier this year, Asia-Pacific economies have withstood the initial capital outflow risks resulting from the Fed’s move.
“The tailwinds from improving global trade will offset the headwinds from the tightening of global financial markets,” the report said. ‘Risks remain’