World Bank warning for Asia: The worst economic outlook in 50 years…

The World Bank lowered its forecast for China’s growth next year, saying emerging East Asian economies are bracing for one of the lowest growth rates in fifty years as U.S. protectionism and rising levels of of debt create economic problems.

Forecasts showed the region would reach its slowest growth rate since the late 1960s, barring extraordinary events such as the coronavirus pandemic, the Asian financial crisis and the global oil crisis of the 1970s.

WORLD BANK REDUCED GROWTH FORECASTS

The bank’s more pessimistic forecasts for 2024 underscored growing concerns about China’s slowdown and how it will be reflected in Asia.

China capped its 2023 growth target at a low rate (5 percent) not seen in decades. Citing a number of weak indicators for the country, the World Bank announced that it expects China to grow 4.4 percent in 2024.

The bank also lowered its 2024 gross domestic product growth forecast for developing economies in East Asia and the Pacific, including China, from 4.8 percent to 4.5 percent.

“The next big key to growth in a region that thrives on trade and manufacturing investment will be reforming service sectors to take advantage of the digital revolution,” said Aaditya Mattoo, World Bank chief economist for East Asia and the Pacific.

PROTECTIONIST LAWS IN THE USA HAD A NEGATIVE AFFECT

The worsening forecasts also showed that not only China but much of the region was beginning to be affected by new US industrial and trade policies under the Inflation Reduction Act and the Chip Act. Exports of products affected by the law to the United States fell.

According to the World Bank, exports of electronics and machinery from China and Southeast Asian countries such as Indonesia, Vietnam, the Philippines, Malaysia and Thailand also decreased after Joe Biden’s protectionist policies came into effect.