China to drag down growth in developing Asia: World Bank

China's economic slowdown will hit growth in developing East Asia and the Pacific from this year until at least 2018, the World Bank said today, warning of volatile global markets and urging caution.
Regional growth is forecast to slow from 6.5 per cent in 2015 to 6.3 per cent this year and 6.2 per cent in 2017 and 2018, the bank said in its latest outlook.
However, Southeast Asian economies led by Vietnam and the Philippines are still expected to see healthy expansion, with both forecast to see growth rates of more than 6.0 per cent, it said.
The bank said the regional outlook reflected China's gradual shift to slower, more sustainable growth, expected at 6.7 per cent this year and 6.5 per cent in 2017 and 2018, from 6.9 per cent in 2015.

China is in the midst of reforms as it moves to make domestic consumption a key economic growth driver instead of exports and as manufacturing gives way to services taking on a bigger role in the economy.
"Continued implementation of reforms should support the continued rebalancing of domestic demand," the report said on the Chinese economy.

"In particular, growth in investment and industrial output will moderate, reflecting measures to contain local government debt, reduce excess industrial capacity and reorient fiscal stimulus toward social sectors."
Victoria Kwakwa, incoming World Bank East Asia and Pacific vice president, said in a statement that the region's developing countries accounted for "almost two-fifths of global growth" last year.

"The region has benefited from careful macroeconomic policies, including efforts to boost domestic revenue in some commodity-exporting countries. But sustaining growth amid challenging global conditions will require continued progress on structural reforms," she said.
The forecasts were made against a backdrop of slowing world growth, weak global trade, low commodity prices and volatile financial markets, with China's economic slowdown a major drag.
Excluding China, regional growth is projected to pick up from 4.7 per cent last year to 4.8 per cent this year and 4.9 per cent in 2017 and 2018, powered by Southeast Asia's robust economies, the bank said.

"Among the large developing Southeast Asian economies, the Philippines and Vietnam have the strongest growth prospects, both expected to grow by more than 6.0 per cent in 2016," it said.