GG News Bureau
Washington, D.C., 12th Oct. The World Bank has predicted a further slowdown in China’s economic growth in 2025, raising concerns about the ripple effects on regional economies in East Asia and the Pacific. According to a report by Bloomberg, the World Bank anticipates that China’s growth will decrease to 4.3% in 2025, down from an expected 4.8% in 2024. This deceleration is expected to influence overall growth in the region, which includes countries such as Indonesia, Australia, and South Korea. The region’s growth is projected to fall to 4.4% in 2025, a decline from approximately 4.8% in 2023.
For the past three decades, China’s economic expansion has significantly benefitted its neighbors; however, the World Bank notes that “the size of that impetus is now diminishing.” The organization emphasizes that while recent fiscal measures may provide a short-term boost, sustainable growth in the long term will hinge on implementing deeper structural reforms.
Chinese authorities initially set a growth target of around 5% for 2023, but this goal has become increasingly unlikely due to weak consumer spending and a troubled property market. In late September, the Chinese government introduced a series of stimulus measures, including interest rate cuts, aimed at revitalizing the economy.
Rising Hopes for Fiscal Measures
In light of the slowing growth, there is growing optimism for further fiscal measures to stimulate spending, restore confidence, and rejuvenate the economy. The World Bank’s growth forecast for 2023 aligns with estimates from a Bloomberg survey; however, its prediction for 2025 is slightly below the median forecast of 4.5%.
In addition to the concerns surrounding China’s economic performance, the World Bank has highlighted several factors that could impact the East Asia and Pacific region, including shifting trade and investment patterns, along with global policy uncertainties. While trade tensions between the U.S. and China have opened up opportunities for countries like Vietnam, new restrictions on imports and exports are limiting some economies’ capabilities as key players in global trade.
Technological Challenges for Labour Markets
The report also points out the influence of new technologies, such as industrial robots and artificial intelligence (AI), on labor markets in the region. Although fewer jobs in Asia are at risk from AI, given the prevalence of manual labor tasks, the region is expected to derive fewer benefits from the productivity gains that AI can offer.
As the World Bank’s predictions unfold, the economic landscape of East Asia and the Pacific is poised for significant changes, with China’s growth trajectory influencing the broader regional economy. The emphasis on structural reforms and adaptation to evolving economic conditions will be crucial for ensuring sustained growth and stability in the years to come.
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