Developing countries in the East Asia Pacific region will see stable economic growth this year, at 7.1 per cent, largely unchanged from 2013, said the World Bank.
While growth is down from the average rate of 8.0 per cent from 2009 to 2013, East Asia remains the fastest growing region in the world, the development bank said in the East Asia and Pacific report released today.
In China, growth will ease slightly, to 7.6 per cent this year from 7.7 in 2013.
Excluding China, the developing region will grow by 5.0 per cent, slightly down from 5.2 per cent in 2013.
"The region’s growth is bolstered by a recovery in high-income economies and the market’s modest response so far to the Federal Reserve’s tapering of its quantitative easing.
Flexible currencies will help East Asia deal with external shocks, including potential capital-flow reversals. Most countries have adequate reserves to cover temporary trade and external shocks," the World Bank said.
Yet, it cautioned that structural reforms will be the key to long-term growth.
Over the longer term, structural reform can increase developing East Asia’s underlying growth potential and enhance market confidence.
China has already begun a series of structural reforms in finance, market access, labour mobility and fiscal policy to increase efficiency of growth and boost domestic demand.
Successful reforms in China could bring considerable benefits to trade partners supplying it with agricultural products, consumption goods and modern services. Conversely, spillovers from a disorderly rebalancing in China could hurt regional and global growth, especially in countries relying on natural resource exports.
The rest of the region’s developing countries could also benefit from structural reforms, such as facilitating international trade and promoting foreign direct investment, especially in the services sector.