The World Bank raised its economic growth forecast for the developing East Asia and Pacific region for 2017 and 2018, citing improved global growth prospects and continued strong domestic demand.
The developing East Asia and Pacific region, which includes China, is expected to grow 6.4% and 6.2% in 2017 and 2018, respectively. The positive outlook, however, is clouded by rising trade protectionism and geopolitical tensions in the region, the World Bank said in its October 2017 edition of the East Asia and Pacific Economic Update.
The World Bank said it expects China's economy to grow 6.7% in 2017 and 6.4% in 2018. Its previous forecasts were for China to grow 6.5% in 2017 and 6.3% in 2018, Reuters reported.
China's economic growth is expected to moderate in 2018 to 2019 as the economy shifts from investment and external demand toward domestic consumption, the bank said. For the rest of the region, including the large Southeast Asian economies, growth will be 5.1% in 2017 and 5.2% in 2018, up from 4.9% in 2016, the report said.
The bank noted that hostile statements by U.S. President Donald Trump and North Korean leader Kim Jong Un in recent weeks have raised geopolitical tensions in the region.
"Because of the region's central role in global shipping and manufacturing supply chains, escalation of these tensions could disrupt global trade flows and economic activity," the World Bank said.
To maintain resilience against risks, countries need to "strike a balance between prioritizing short-term growth and reducing medium-term vulnerabilities," said Victoria Kwakwa, vice president for the East Asia and Pacific region.
"Reducing risks to financial sector stability and strengthening competitiveness ... remain priorities," said Sudhir Shetty, the lender's chief economist for the East Asia and Pacific region.
The report also said that tourism development and deeper regional integration could potentially shield the region from protectionism.