World Bank Downgrades APAC Growth Forecast
(29 September 2023 – Global) The World Bank forecasts developing East Asia and Pacific economies to expand by five percent in 2023 as Chinese growth falters and elevated interest rates curtail trade volumes.
The World Bank flagged the significant increase of general household, corporates and government debt as a key risk, particularly in China, Thailand and Vietnam. For 2024, the organisation anticipates the East Asia and Pacific region to grow 4.5 percent in 2024, versus 4.8 percent previously.
Elevated interest rates are impacting corporates globally. In the United Kingdom the Bank of England (BoE) warned lenders not to underestimate the risk of loan defaults as higher inflation and increased interest rates hit vulnerable borrowers. England and Wales registered the highest frequency of company insolvencies since 2009 in Q2 2023.
“Longer-term structural factors, elevated debt levels in the world’s second-largest economy and weakness in its property sector are all key contributors to the downgrade. While domestic factors are likely to be the dominant influence on growth in China, external factors will have a stronger influence on growth in much of the rest of the region” the World Bank said.