JAKARTA, NETRALNEWS.COM - The World Bank estimates that the economies of developing countries in the East Asia and Pacific region will slow to 5.9 percent in 2019, as compared to the previous year of 6.3 percent.
This slowdown, according to the World Bank, will continue in 2020 and 2021, with the economies in the two regions slipping to 5.7 percent and 5.6 percent, respectively.
The slowing-down of economy in East Asia and the Pacific is the result of the global economic downturn which is characterized by weak demand, including demand from China. The condition is also caused by a trade war between the United States (US) and China, which is increasingly becoming uncertain. These two problems have led to a decline in exports, investment in countries in the East Asia and Pacific region. This economic slowdown has become very influential on the level of poverty reduction.
"We estimate that nearly a quarter of the population in developing regions in East Asia and the Pacific live below the poverty line of the upper middle class of US$ 5.50 per day. This includes more than 7 million more than we projected in April when the region's growth looks more strong, "said the World Bank for the East Asia and Pacific Region in a statement on Thursday (10/10/2019).
In a World Bank analysis, slowing GDP growth in China occurred from 6.6 percent in 2018 to 6.1 percent in 2019. While in 2020 it is predicted to slow down again to the level of 5.9 percent and 5.8 percent in 2021. For Indonesia in the same period it was stated that GDP growth slowed from 5.2 percent (2018) to 5 percent (2019). While in 2020 it is projected to increase to 5.1 percent and 5.2 percent in 2021.
Malaysia's GDP has slowed from 4.7 percent (2018) to 4.6 percent in 2019. While in 2020 and 2021 it is expected to stagnate at 4.6 percent. In the Philippines it also fell from 6.2 percent to 5.8 percent. And in 2020 it is estimated by the World Bank to be 6.1 percent and 6.2 percent in 2021.
While other countries in the East Asia and Pacific region are also seen to slow down in 2019, there are other countries that have actually grown up to 2021 such as Timor Leste.
It was explained by the World Bank that the economic slowdown in China that happened faster than expected further weakened its export demand. This was compounded by developments in the Euro area and the United States and the chaotic Brexit.
To deal with increasing risks, countries in the East Asia and Pacific region are using fiscal or monetary measures to help stimulate the economy. At the same time the government needs to maintain fiscal and debt sustainability.
The World Bank's Chief Economist for the East Asia and Pacific Region, Andrew Mason, added that from the World Bank's perspective, the various regional and global conditions that occur will pose a long-term threat to economic growth in each country within the East Asian region and the Pacific. Therefore, it needs more concrete efforts from the government to maintain the economic situation especially those caused by domestic factors so that it does not worsen.
"When companies look for ways to avoid tariffs, it will be difficult for developing countries in East Asia and the Pacific to replace China 's role in the global production chain in the short term because of inadequate infrastructure and small scale production," Andrew said.