World Bank raises 2017, 2018, East Asia growth forecasts, sees geopolitical risks

© Reuters. World Bank President Jim Yong Kim delivers a speech during the Indonesia Infrastructure Finance Forum in Jakarta

SINGAPORE (Reuters) — The world Bank raised its economic growth forecasts for developing East Asia and Pacific for this year and 2018, but added that was generally dampened the positive Outlook, by risks, such as rising trade protectionism and geopolitical tensions.

The Washington-based lender expects the developing East-to grow in Asia and the Pacific (EAP) region, China, 6.4 percent in 2017 and 6.2 percent in 2018.

His prognosis in April was for 6.2 percent growth in 2017 and 6.1 percent growth in the year 2018.

«The economic prospects for the region remain positive and take advantage of an improved external environment and strong domestic demand,» the world Bank said in its latest East Asia and Pacific Economic Update report on Wednesday.

The Outlook, however, sees risks from rising trade protectionism and economic nationalism, which could dampen global trade, as well as the possible escalation of the geopolitical tensions in the region, the bank said.

Increasingly hostile statements by US President Donald Trump and the North Korean leader, Kim Jong-Un have in the past weeks, the fear of a miscalculation could lead to war, especially since Pyongyang carried out its sixth and most powerful nuclear test on Sept. 3.

«Because in the region the Central role in the global shipping and manufacturing, supply chains, and escalation in these tensions, global trade and economic activity», the world Bank could be said to interfere.

This could be accompanied by financial market volatility, would be likely to hinder the economic growth in the region, and it is also a «flight to safety could be said» that the spurs outflows of capital, the bank.

The world Bank said the Chinese economy now expected to grow 6.7 percent in 2017 and 6.4 percent in 2018. Its previous forecasts were to grow for China to 6.5 percent in 2017 and 6.3% in the next year.

China’s economic growth is projected to moderate in 2018-2019, as the economy is said to restore the balance away from investment and foreign demand towards domestic consumption, the bank.

The world Bank cut growth forecasts for several countries in Southeast Asia, including Myanmar and the Philippines, while the increase in the forecasts for Malaysia and Thailand.

«The companies seem to have in Myanmar delayed investments, as they wait for the government to be the economic agenda is clear,» said the bank.

It’s growth forecasts by 0.5 percentage points for both 2017 and 2018 to 6.4 percent and 6.7 percent cut in Myanmar.

«These projections don’t factor in a longer-term impact of the ongoing uncertainty in the Rakhine state, which, if it persists, this adverse effect due to the slowing down of foreign investment.»

More than half a million Rohingya fleeing from Myanmar’s military suppression of protests in Rakhine State led in late August, has been condemned by the United Nations as «ethnic cleansing».

In the Philippines, a delay in the planned government infrastructure program, the economic prospects for growth, said world Bank weakened.

She added that Malaysia’s growth, gaining a lift from higher investment and a revival of world trade, while in Thailand, the growth forecasts have been revised higher because of a stronger recovery of exports and tourism.

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