WB slashes Asia-Pacific growth forecast

SINGAPORE: The World Bank on Monday slashed its 2012 growth forecast for developing countries in East Asia and the Pacific to 7.2 percent, down from 8.3 percent in 2011, due to the fragile global economy.

It will be the slowest growth rate in the region since 2001, even slower than the peak of the financial crisis in 2009, said the bank's chief regional economist Bert Hofman.

Gross domestic product growth should rebound to 7.6 percent in 2013, driven by domestic demand, but a worsening of the eurozone debt crisis, problems in the United States and a further slowdown in China are major risks, it warned. "In a fragile external environment, the economy in the East Asia and Pacific region continues to slow down," the bank said in its latest East Asia and Pacific Data Monitor.

The new forecast is down from its projection in May of 7.6 percent growth for the region this year. "Should conditions in Europe deteriorate sharply, no developing region would be spared," the World Bank said.

"With a 'major' crisis, GDP growth could drop by more than two percentage points in 2013." The region covered by the new forecast comprises China, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Fiji, Laos, Mongolia, Myanmar, Papua New Guinea, the Solomon Islands and East Timor.

Domestic demand is expected to drive growth in East Asia and the Pacific next year, making up for muted trade growth in exports.

AFP