The World Bank on Monday scaled back slightly its 2013 growth forecasts for emerging East Asia and warned about possible over-heating in the region’s larger economies, but the global lender said the Bank of Japan’s sweeping monetary expansion should provide a fillip to developing countries.
Japan’s efforts to stimulate its economy through monetary easing is likely to be “mostly good” for developing Asian economies such as Thailand and the Philippines, which produce components for Japanese exporters, the World Bank said.
The Bank of Japan on April 4 stunned markets by unveiling a monetary expansion campaign with plans to inject about $1.4 trillion into the economy over two years to break a deflationary cycle and end two decades of stagnation.
The unprecedented easing has provided fresh momentum to yen bears, with the dollar tapping a four-year high of 99.95 yen on Thursday.
The World Bank, in its latest East Asia and Pacific Update, cut its gross domestic product (GDP) growth projection for China by 0.1% point to 8.3% for 2013, citing Beijing’s ongoing efforts to restructure its economy.
The international lender also lowered its forecast for Indonesia to 6.2% from 6.3% due to an expected moderation in investment growth, but raised its growth outlook for Thailand and Malaysia.
Overall, the World Bank expects developing East Asia to grow by 7.8% this year, below its December estimate of 7.9% but faster than last year’s 7.5%.