"2013 marked another year of weakening growth in the East Asia and Pacific region. Growth moderated to 7.2 percent in 2013 from 7.4 percent in 2012 with growth in China unchanged from the 7.7 percent recorded in 2012. A one percentage point slowdown in growth in the rest of the region reflects a moderation of economic activity in Indonesia, Malaysia, and Thailand where weak commodity revenues and policy tightening to address economic imbalances accumulated during the years of above-potential growth cut into activity. Toward the end of 2012, authorities in the region began to tighten policies to unwind imbalances, contributing to sharp declines in economic activity in the first quarter of 2013 when external demand was still weak. The impact of domestic adjustment was also exacerbated by a tightening of international financial conditions in the second quarter of 2013. Despite the mid-year financial turbulence, growth in the region has been strengthening since 2013Q1, supported by improved external demand, lower imports, and policy stimulus in China. Since August 2013, capital inflows to the region have also rebounded, although pressures on regional assets and currencies, especially in Indonesia and Thailand, continued throughout 2013. Sentiment has turned up and both industrial production and exports have started to firm, but performance remains uneven across the region. In China, quarterly GDP growth picked up to a 9.3 percent annualized rate in the third quarter. Quarterly GDP growth in the rest of the region also accelerated to an annualized rate of 5.2 percent in Q3, mainly because of better net exports resulting from lower imports.
Economic prospects for the region reflect several counterbalancing factors, including the impact of normalization of long-term interest rates, which is projected to weigh on prospects for several middle-income countries (Indonesia, Malaysia, and Thailand). At the same time, the recovery in import demand from high-income countries should spur acceleration in global trade and regional exports. Declining commodity prices are, however, projected to weigh on outturn for commodity exporters (Indonesia, Malaysia, Mongolia, and Papua New Guinea).
Aligning growth with the potential growth rate in several major middle-income economies in 2014 will help alleviate domestic vulnerabilities generated during the years of expansionary policies. Full-year growth for China is expected to remain at around 7.7 percent in 2014, but the quarterly pace should slow somewhat toward the second half of the year, with growth projected to stabilize at around 7.5 percent in 2015 and 2016. Growth in the rest of the region should also be broadly stable in 2014"
Economic prospects for the region reflect several counterbalancing factors, including the impact of normalization of long-term interest rates, which is projected to weigh on prospects for several middle-income countries (Indonesia, Malaysia, and Thailand). At the same time, the recovery in import demand from high-income countries should spur acceleration in global trade and regional exports. Declining commodity prices are, however, projected to weigh on outturn for commodity exporters (Indonesia, Malaysia, Mongolia, and Papua New Guinea).
Aligning growth with the potential growth rate in several major middle-income economies in 2014 will help alleviate domestic vulnerabilities generated during the years of expansionary policies. Full-year growth for China is expected to remain at around 7.7 percent in 2014, but the quarterly pace should slow somewhat toward the second half of the year, with growth projected to stabilize at around 7.5 percent in 2015 and 2016. Growth in the rest of the region should also be broadly stable in 2014"
