The World Bank announced in October that it had made a new economic projection, which generated comments about the pace of economic growth in East Asian countries. This projection highlighted a slowdown in the regional economic expansion, which is related to the global scenario of uncertainty and trade tensions. Despite still being above the world average, this report raises an alert about the continuous slowdown that challenges governments and businesses. China also appears in this report, being the largest economy in the region, and is placed at the center of this revision. Read more about this subject to understand.
What are the reasons behind the World Bank’s revision?
The report, titled “East Asia and Pacific Economic Update,” assesses the economic performance of the countries in this region, as well as the outlook for the coming year. According to the World Bank, the reduction in economic growth is the result of three factors: a fall in global demand, uncertainties in fiscal policies, and an increase in public debt, especially in China.
The report notes that some economies have maintained resilience, such as Thailand, Malaysia, and Vietnam. However, despite this, the overall scenario is one of slowdown.
Also highlighted in the report was the trade relationship with the United States. The new tariffs imposed on Chinese products and those from other Asian countries were a factor that reduced exports in key sectors of the region, such as textiles and electronics. This trade tension between the US and China, the two largest economies in the world, remains a risk factor for the region. Because the recovery of these Asian countries is slower, it has impacted several sectors, putting pressure on their economies; the sectors most affected were manufacturing and technology, pillars of East Asian economies.
The Chinese slowdown and its repercussions
China currently accounts for about 60% of the GDP of the entire East Asian and Pacific region, and this is the main reason for this revision. The country’s growth expectations have fallen, according to the World Bank, due to less fiscal stimulus, high public debt, and a real estate sector facing significant difficulties. Chinese debt currently exceeds 70% of GDP, and this is seen as a vulnerability factor for the regional economy.
Furthermore, the report also points out that Chinese economic uncertainty is already having a ripple effect on neighboring countries, especially Indonesia and Thailand. This is because both depend on trade with the country. This slowdown affects the supply chain, tourism, and even foreign direct investment.
Challenges and pathways to a sustainable recovery
The report suggests three priority actions to avoid prolonging this phase of low economic growth: strengthening human capital, expanding infrastructure investments, and aligning social and economic development policies.
Another warning from the World Bank concerns the advancement of technology and artificial intelligence, which is changing the labor market. In places like Vietnam, for example, the use of industrial robots has increased wages and productivity, but has also replaced less-skilled workers. Governments need to accelerate technological adaptation policies to avoid excluding professionals and instead expand their opportunities.
What can we expect from the future of East Asia-Pacific?
The World Bank’s forecast for 2026 indicates that East Asia-Pacific is entering a new phase: less accelerated, but more aware of its challenges, which are mainly structural.
Due to trade tensions and increasing debt, the region needs to reinvent itself and have consistent strategies for its growth. Even so, the outlook can be optimistic, especially in countries that invest in technology, education, and innovation. The situation in East Asia will depend, more than ever, on its ability to balance progress and stability.
