In 2023, the East Asia and Pacific (EAP) region experienced a growth rebound to 5.1 percent from 3.4 percent in 2022. This was largely due to a temporary surge in economic activity in China at the beginning of the year after the pandemic restrictions were lifted.
Key points
- Growth in EAP set to decelerate to 4.5 % in 2024 and to 4.4 % in 2025. This is mainly due to the slowdown of growth in China, which is facing domestic and external challenges. Excluding China, the EAP region is expected to see a modest improvement in growth, driven by the recovery of tourism in the Pacific Island economies.
- Risks to the outlook are tilted to the downside. The main sources of uncertainty include the evolution of the COVID-19 pandemic and its variants, the pace and effectiveness of vaccination campaigns, the possibility of renewed outbreaks and lockdowns, the potential spillovers from China’s property sector distress, the escalation of geopolitical tensions, and the environmental and social challenges.
- Policy priorities vary across countries. Some countries need to maintain fiscal and monetary support to mitigate the impact of the pandemic, while others need to consolidate public finances and address debt vulnerabilities. Structural reforms are also needed to enhance resilience, inclusiveness, and sustainability of growth.
However, this reopening effect in China was short-lived. The real estate sector continued to face challenges with declining sales and prices, putting financial pressure on property developers and weighing down investment growth. Additionally, the export sectors encountered difficulties due to weak external demand. Although there was some improvement in consumption towards the end of the year, consumer confidence remained lower than pre-pandemic levels.
Growth in the East Asia and Pacific (EAP) region to slow down to 4.5 percent in 2024
Growth in the East Asia and Pacific (EAP) region is expected to slow down to 4.5 percent in 2024 and 4.4 percent in 2025, mainly due to the deceleration of growth in China. However, if we exclude China, the EAP region is projected to experience a modest strengthening of growth, reaching 4.7 percent in both 2024 and 2025.
The Pacific Island economies are anticipated to see a more significant improvement this year, driven by the ongoing recovery in tourism. Compared to previous forecasts, the growth in EAP is expected to be 0.1 percentage point lower in 2024 and 2025. These downward revisions indicate that the output in the EAP region is now projected to fall even further below its pre-pandemic trend over the forecast period.
China, economic growth forecasted to decrease to 4.5 percent in 2024
In China, economic growth is forecasted to decrease to 4.5 percent in 2024, and further to 4.3 percent in 2025. This revision is a 0.1 percentage point decrease from the previous June forecasts for both years, mainly due to a weaker domestic demand. It is anticipated that consumption will slow down significantly due to low confidence and increased economic uncertainty.
While infrastructure spending is expected to provide some support, investment growth is likely to remain restrained due to ongoing weaknesses in the property sector. Looking ahead, structural challenges such as increasing indebtedness, an aging and shrinking workforce, and limited opportunities for productivity growth are expected to continue to impact economic activity.
