Growth in the developing economies of East Asia and the Pacific (EAP) is projected to decelerate in the near term. Regional growth is projected to decline from 6.3 percent in 2018 to 5.8 percent in 2019 and to 5.7 and 5.6 percent in 2020 and 2021, respectively. In China, heightened trade tensions with the United States have accelerated the moderation in growth already underway as the government focuses on rebalancing the economy towards consumption.
Growth in the region’s other large economies has also moderated and the recovery in manufacturing observed at the beginning of the year proved to be short-lived. Weakening external demand combined with global trade policy uncertainty have been weighing on regional activity through declining exports, deteriorating business confidence, and weakening investment.
Growth in the region’s smaller economies ticked up in the first half of 2019, reflecting robust growth in the tourism, real estate, and extractive sectors.
The region has made significant strides in eliminating extreme poverty, but as growth moderates, the pace of poverty reduction is also slowing. The percentage of people living on less than $1.90 a day is now estimated at less than 1.5 percent (3.8 percent excluding China). This number is expected to reach 1 percent by 2021 (2.7 percent excluding China). Nonetheless, an aging population, rapid urbanization, slowing growth in global trade, and rapidly advancing technologies present new challenges to sustainable progress in the region.
Over the past two decades, poverty has decreased dramatically across most of developing East Asia. Between 1990 and 2013, the number of people in the region living in extreme poverty fell by over 920 million. The rapid growth in labor incomes among the poor, along with low unemployment, public transfers (such as pensions, cash transfers, and unemployment insurance, among others), structural transformations, and public investments contributed to the decline.
Nevertheless, challenges remain. While poverty continues to decline, over a quarter of the region’s population remains economically insecure, and inequality is perceived to be high and rising in many countries. Rapid urbanization and business demands are feeding a massive need for infrastructure investment in the region, where 130 million lack access to power, 600 million lack access to adequate sanitation, and broadband infrastructure and connectivity are lagging. Fragility and conflict are also intensifying in some countries.
East Asia and Pacific is the epicenter of the double burden of stunting and obesity—both forms of malnutrition. Indonesia, Myanmar, the Philippines, and Vietnam are among a group of 34 countries accounting for 90% of the global burden of stunting, while China and Indonesia are among the 10 countries that account for more than 50% of the global burden of obesity. Stunting significantly reduces the physical and mental capabilities of children, imposing enormous human and economic costs. In Indonesia, for example, where 37% of children are stunted, economic losses associated with stunting are estimated at 2-3% of GDP.
The region includes 13 of the 30 countries that are most vulnerable to climate change. It also bears the brunt of 70% of the world’s natural disasters, which have affected more than 1.6 billion people in the region since 2000. The Pacific Island countries, where the rising sea level is threatening coastal areas and atoll islands, have been hit hard.
East Asia and Pacific is also the largest contributor to greenhouse gas emissions, accounting for one-third of the world’s carbon dioxide emissions and 60% of its coal consumption. The region plays a critical role in advancing the global climate change agenda. The World Bank is working with governments, the private sector, and other development partners on a range of innovative solutions to support greener and cleaner energy policies, including carbon pricing.
Last Updated: Oct 11, 2019