Table 3. GDP growth forecast

Table 3. GDP growth forecast

East Asia & Pacific East Asia & Pacific (excluding China) ASEAN-5 Pacific Island Countries

China Indonesia Malaysia Philippines Thailand Vietnam Cambodia Lao PDR Mongolia Myanmar Papua New Guinea Timor-Leste

1.2 7.2 −3.6 2.6

−3.8

3.4 −9.5 −3.3

2.2 8.1 −2.1 −5.5 3.7 3.1

−9.5 −6.2

5.7 1.5 2.9 2.6 −3.1 3.0 0.5 2.5 −4.4 1.6 3.2 −18.0 −3.5 −8.6 1.0 1.5

5.0 4.8 4.9 2.9 3.2 4.6 5.3 5.0 5.4 5.1 5.3 5.7

5.0 5.1 5.5 5.7 2.9 5.3 4.5 3.8 2.5 1.0 4.0 2.4 2.8 4.5 5.1 5.1 6.4 4.2 6.5 5.8 3.1 4.1 7.2 6.7 4.8 5.2 2.5 3.8 2.4 5.5 3.0 4.0 4.2 3.0 3.0

Palau Fiji Solomon Isl. Tuvalu Marshall Isl. Vanuatu Kiribati Tonga Samoa Micronesia Nauru

−9.7 −17.1 −17.2 −4.1 −3.4 −0.2 −4.9 0.3 −2.2 −2.5 −5.4 0.5

−0.5

1.5 0.5 −2.7 −3.1 −7.1 −1.8 −3.2 0.7 1.5

7.2 6.3 −2.9 3.5 3.0 2.0 1.8 −1.6 −0.3 0.4 0.9

6.0 18.2 12.6 7.8 −4.5 2.6 3.0 3.5 1.5 2.2 2.2 3.4 1.5 2.3 −1.6 3.3

−5.0 2.0

−0.5

3.0 0.9 1.9

Source: World Bank; World Bank estimates and projections. Notes: Percent growth of GDP at market prices. Values for 2021 for the small island economies refer to GDP growth estimates. AsEAn-5 comprises indonesia, Thailand, the Philippines, Malaysia, and Vietnam. Values for Timor-Leste represent non-oil GDP. for the following countries, values correspond to the fiscal year: federal states of Micronesia, Palau, and Republic of the Marshall islands (october 1–september 30); nauru, samoa, and Tonga (July 1–June 30). Myanmar growth rates refer to the fiscal year from october to september.

regional currencies, and passthrough into higher inflation, especially in countries that rely on short-term capital inflows (for example, Mongolia, Malaysia and to some extent Indonesia).

The outlook is subject to multiple downside risks, including sharper-than-expected monetary tightening, financial stress, and slowdown in China, and worsening war in Ukraine. If global real interest rates evolve in line with market expectations, they will remain below their pre-pandemic average. However, persistent global inflation may lead major central banks to undertake more policy tightening than currently anticipated to contain price pressures. This would cause even sharper-than-expected slowdown in global growth and trigger significant capital outflows from the EMDEs. Tighter global financial conditions could also induce debt distress in highly indebted EAP countries.

Historically, financial crises are more likely when the U.S. Federal Reserve implements aggressive tightening and when global confidence is weak. These episodes have been followed by increased financial market volatility in EMDEs, including currency depreciation, wider bond spreads, portfolio outflows, equity price adjustments, and liquidity shortages. Renewed COVID-19 outbreaks and public health restrictions as well as a further escalation of the property sector crisis might further suppress Chinese growth and disrupt value chains. Finally, worsening war in Ukraine or trade disruptions could lead to shortages and higher prices for food, fertilizer, and energy. Geopolitical fragmentation could also impede global trade and investment and weigh on global and regional growth.