1、REVIVING GROWTHWORLD BANK EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023WORLD BANK EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023Reviving Growth 2023 International Bank for Reconstruction and Development/The World Bank1818 H Street NW,Washington,DC 20433Telephone:202-473-1000;Internet:ww

2、w.worldbank.orgSome rights reserved1 2 3 4 26 25 24 23This work is a product of the staff of The World Bank with external contributions.The findings,interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank,its Board of Executive Directors,or the g

3、overnments they represent.The World Bank does not guarantee the accuracy,completeness,or currency of the data included in this work and does not assume responsibility for any errors,omissions,or discrepancies in the information,or liability with respect to the use of or failure to use the informatio

4、n,methods,processes,or conclusions set forth.The boundaries,colors,denominations,and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein

5、 shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank,all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attribution 3.0 IGO license(CC BY 3.0 IGO)http:/creative

6、commons.org/licenses/by/3.0/igo.Under the Creative Commons Attribution license,you are free to copy,distribute,transmit,and adapt this work,including for commercial purposes,under the following conditions:AttributionPlease cite the work as follows:World Bank.2023.Reviving Growth.World Bank East Asia

7、 and Pacific Economic Update(April).Washington,DC:World Bank.doi:10.1596/978-1-4648-1983-4.License:Creative Commons Attribution CC BY 3.0 IGOTranslationsIf you create a translation of this work,please add the following disclaimer along with the attribution:This transla-tion was not created by The Wo

8、rld Bank and should not be considered an official World Bank translation.The World Bank shall not be liable for any content or error in this translation.AdaptationsIf you create an adaptation of this work,please add the following disclaimer along with the attribution:This is an adaptation of an orig

9、inal work by The World Bank.Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank.Third-party contentThe World Bank does not necessarily own each component of the content contained within the work.

10、The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties.The risk of claims resulting from such infringement rests solely with you.If you wish to re-use a component of the

11、 work,it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner.Examples of components can include,but are not limited to,tables,figures,or images.All queries on rights and licenses should be addressed to World Bank Publicat

12、ions,The World Bank Group,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.ISBN(electronic):978-1-4648-1983-4 DOI:10.1596/978-1-4648-1983-4Cover photo:Young asian women farmer working and check quality control in orchid farm greenhouse by Suriyapong Thongsawang Getty Images.Use

13、d with the permission of Getty Images.Further permission required for reuse.ContentsList of Abbreviations xiPreface and Acknowledgments xiiiSummary xvOverview xvii1.Recent Developments 12.Drivers of Growth in 2022 42.1.Domestic developments 42.2.External environment 53.Global Conditions and EAP Grow

14、th in 2023 83.1.Global growth 83.2.Commodity prices 103.3.Financial tightening 103.4.Outlook and risks 133.5.Macroeconomic policy 214.A Long View of Growth and Structural Change 274.1.Growth and volatility 274.2.Poverty and inequality 284.3.Productivity and structural change 304.4.Structural reforms

15、 355.Looming Challenges 445.1.Decoupling?445.2.Aging 565.3.Adaptation 685.4.Potential growth 79References 81REVIVING GROWTHiiiLiSt OF COntEntSList of FiguresOverviewFigureO1.Most major EAP economies have recovered and are growing,but output in most Pacific Island Countries is still not back to pre-p

16、andemic levels xviiFigureO2.Domestic demand is moderating and goods exports are declining xviiiFigureO3.Most governments have had less expansionary fiscal policy,and began to tighten monetary policy,in 2022 xviiiFigureO4.Global growth in 2023 is projected to be slower than in 2022 which,along with m

17、onetary tightening,will affect growth in the region xixFigureO5.EAP countries have seen two decades of higher and less volatile growth than other economies,and all have transitioned either to lower or upper middle-income status xxFigureO6.EAP convergence with high income countries,which was faster t

18、han in other countries,has recently stalled xxFigureO7.And productivity growth has been declining xxiFigureO8.In recent years,the share of manufacturing in GDP declined in major EAP economies (other than Cambodia and Vietnam),and of services in GDP increased xxiFigureO9.In major countries,workers mo

19、ved mostly from least productive agriculture to below-average productivity services sectors,and not much to the most productive manufacturing and services sectors xxiiFigureO10.The adoption of digital technologies is likely to increase productivity in services xxiiiFigureO11.Reforms contributed posi

20、tively to GDP-per-capita growth in EAP xxiiiFigureO12.Countries need to address the significant“reform gap”between EAP and advanced economies xxivFigureO13.Exports of some EAP economies to the US and China increased after they imposition of trade restrictions on each other xxvFigureO14.Measures take

21、n after 2018 adversely affected innovation of Chinese firms which had prior collaborations with the US,and of US firms which had prior collaborations with China xxvFigureO15.The US and,increasingly,China are important sources of knowledge for other East Asia and Pacific countries xxviFigureO16.The a

22、dverse effects of a trade and technological rift between large countries can be reduced by third countries forming(separate)trade agreements that ideally include each large country xxviiFigureO17.EAP countries are aging faster than rich countries did,and the working age population will peak at lower

23、 levels of income per capita xxviiFigureO18.Aging could reduce the share of the conventional“working age”population,unless older people(especially women)continue to work xxviiiFigureO19.Aging will increase spending on pensions,and requires bridging the gap between actual and actuarially fair contrib

24、ution rates xxviiiFigureO20.EAP countries are highly exposed to climate change impacts xxixFigureO21.Investing in adaptation will deliver a triple dividend xxxFigureO22.For example,all sectors will benefit from adaptation investments in the Philippines xxxiFigureO23.Aging,deglobalization and climate

25、 change can reduce potential growth,but reforms can offset the impact xxxii1.Recent Developments Figure1.Most major EAP economies have recovered and are growing 1Figure2.But output remains below pre-pandemic levels in most of the Pacific Island Countries 2EAST ASIA AND THE PACIFIC ECONOMIC UPDATE AP

26、RIL 2023ivLIST OF CONTENTSFigure3.Manufacturing and digital services led recovery 2Figure4.Inflation remains high and higher than target ranges in several countries 3Figure5.The number of poor in developing EAP countries is expected to decline in 2023 32.Drivers of Growth in 2022 Figure6.Domestic de

27、mand and exports drove growth in 2022 4Figure7.But consumer demand is now moderating 5Figure8.But there are now signs of weakening foreign demand for goods.5Figure9.even as services exports and tourism revive 6Figure10.China provided significant fiscal support in 2022,but other governments had less

28、expansionary fiscal policy 6Figure11.Monetary policy in EAP has been more supportive than in other EMDEs,but was beginning to tighten 7Figure12.Growth in the US has supported the regions economies in 2022,while China slowdown and financial tightening stemming from the US has hurt growth in the regio

29、n 73.Global Conditions and EAP Growth in 2023 Figure13.Three linked international developments will shape economic performance in the EAP countries 8Figure14.Global growth in 2023 is projected to be slower than in 2022 but prospects have recently improved relative to previous projections 9Figure15.A

30、n increasing share of EAP countries value-added exports are absorbed in China 9Figure16.Commodity prices have recently moderated 10Figure17.Oil price futures have decreased recently 10Figure18.Food and energy prices are beginning to ease in most EAP economies,but global price increases could revive

31、inflationary pressures 11Figure19.Continued high inflation in the US is leading to further financial tightening in the US as well as the EAP region 11Figure20.Expectation of interest rate stays elevated until the end of 2023 12Figure21.Higher domestic interest rates have so far helped ease capital o

32、utflows and depreciation,but risks remain 12Figure22.Growth in the region in 2023 will be influenced by global growth and monetary tightening 13Figure23.GDP growth in 2022 and 2023 forecast 16Figure24.Inflation expectation and monetary policy rates 20Figure25.Government spending has increased in the

33、 last decade,coinciding with an increase in government debt 22Figure26.Countries with fiscal rules tended to have lower spreads compared to countries without fiscal rules 22Figure B1.1.Impact of different shocks on EAP GDP 14Figure B3.1.GDP forecasts relative to 2019 level 18Figure B3.2.Consumer pri

34、ce inflation 19Figure B3.3.Contribution to post-Covid fiscal balance dynamics 204.A Long View of Growth and Structural Change Figure27.EAP countries have seen two decades of higher and more stable growth than other economies 27Figure28.Consequently,EAP countries have all transitioned either to lower

35、 or upper middle-income status 28Figure29.Sound macroeconomic management in major EAP economies helped reduce volatility after the Asian Financial Crisis 29Figure30.Poverty rates have declined markedly during the last two decades in both urban and rural areas 30Figure31.Growth,much more than pro-poo

36、r distribution,helped reduce poverty in the EAP countries 30List of Figures continuedREVIVING GROWTHvLIST OF CONTENTSFigure32.Inequality in the region declined in the 2010s after rising in several countries in the 2000s 31Figure33.And productivity growth has been declining 31Figure34.But EAP converg

37、ence with high income countries,which was faster than in other countries,has recently stalled 32Figure35.while there is still large gap with advanced economies 32Figure36.In recent years,the share of manufacturing in GDP declined in EAP economies(other than Cambodia and Vietnam),and the share of ser

38、vices in GDP increased 33Figure37.The share of manufacturing in GDP and employment has peaked at lower levels of GDP per capita in developing EAP countries than in the early East Asian industrializers 33Figure38.In major countries in recent years,workers moved mostly from least productive agricultur

39、e to below-average productivity services sectors,and not much to the most productive manufacturing and services sectors.While in Vietnam,Cambodia and Myanmar,workers were continuing to move to more productive manufacturing and services 34Figure39.Nevertheless,the growth of productivity within servic

40、es and the movement of workers from agriculture to services have contributed to overall productivity growth in EAP countries 35Figure40.And the adoption of digital technologies is likely to increase productivity in services 37Figure41.Significant reforms were implemented in most major EAP economies

41、until the early 2000s,but fewer have been introduced subsequently 37Figure42a.But countries will need to address the significant“reform gap”between EAP countries and advanced economies.41Figure42b.especially in the services sectors 42Figure43.Trade restrictions have increased in several countries si

42、nce the beginning of 2010s and capital account openness has been reverse in some 43Figure B5.1.Reallocation among firms is productivity enhancing,but is small and not improving over time 36Figure B6.1.Correlation of GDP-per-capita growth in EAP and structural reforms 38Figure B7.Within-sector growth

43、 is the major driver of overall growth,but across-sector growth and demographic dividends are also sizable in several countries 395.Looming ChallengesFigure44.Exports of some EAP economies to the US and China increased after they imposed trade restrictions on each other 45Figure45.Indonesia increase

44、d its exports primarily to China,Vietnam primarily to the US 46Figure46.EAP countries differ in how they participate in GVCs,but most are significantly integrated with the world and with China 46Figure47.But trade patterns are now being molded not just by economics but by uncertain politics 47Figure

45、48.Both the United States(left)and China(right)have imposed significant non-tariff barriers over the last decade 47Figure49.The US and China have pursued different approaches to data governance 49Figure50.Chinas innovation has grown rapidly 50Figure51.Even before recent tensions,Chinas patents decre

46、asingly cited US patents or involved US collaborators and increasingly cited Chinese patents and involved Chinese collaborators(Index,1995=0)51Figure52.State-owned enterprises in China receive more subsidies but are less efficient innovators 51Figure53.Measures taken after 2018 adversely affected th

47、e innovation of both Chinese and US firms with prior patents in sanctioned technologies 52List of Figures continuedEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023viLIST OF CONTENTSFigure54.Measures taken after 2018 adversely affected innovation of Chinese firms which had prior collaborations wi

48、th the US,and of US firms which had prior collaborations with China 52Figure55.Innovation capacity in developing EAP outside China remains relatively small 53Figure56.The US and,increasingly,China are important sources of knowledge for other East Asia and Pacific countries 53Figure57.The adverse eff

49、ects of a trade and technological rift between large countries can be reduced by third countries forming(separate)trade agreements that ideally include each large country 55Figure58.EAPs older population will continue to rise sharply in coming years 56Figure59.Most major economies of EAP are or will

50、 soon experience rapid aging 57Figure60.And peak working age population shares reached at far lower income levels than OECD 57Figure61.Rapid declines in fertility have been the main driver of rapid aging in EAP 58Figure62.Coverage of contributory pension schemes in many EAP economies remains low 58F

51、igure63.And labor market informality is high 59Figure64.The working age population share in major economies of EAP is already shrinking or soon will.59Figure65.Significant proportions of older people in EAP are still working 60Figure66.Rising healthy life expectancy also increases potential working

52、lives,20002019 60Figure67.Aging will drive major increases in pension spending 62Figure68.Civil service pension spending,latest year 62Figure69.Generous civil service pension schemes have created large unfunded liabilities 62Figure70.The epidemiological transition in emerging EAP requires reforms to

53、 prevent,control and manage non-communicable diseases across the lifecycle 63Figure71.Actual vs.actuarially fair contribution rate in contributory DB schemes 65Figure72.EAP countries are highly exposed to climate change impacts 69Figure73.Unabated climate change threats to Chinas economy by 2030 70F

54、igure74.Sectoral priorities for adaptation actions in EAP as revealed in NDCs 73Figure75.All sectors will benefit from adaptation investments in the Philippines 75Figure76.Adaptation investments in the Philippines will have a broad range of employment benefits 75Figure77.Potential growth in the EAP

55、is expected to decline 79Figure 78.Efficient policies and deeper reforms could offset the negative growth impact of aging,deglobalization and climate change 80Figure B9.1.Adaptation measures include risk reduction and risk management 72Figure B10.1 Investing in adaptation will deliver a triple divid

56、end 77List of Figures continuedREVIVING GROWTHviiLIST OF CONTENTSList of TablesOverviewTable O1.Valuing the triple dividend reveals the high returns to investment in different adaptation projects xxx3.Global Conditions and EAP Growth in 2023 Table1.GDP growth forecast 15Table2.Financial sector is we

57、ll-capitalized except for Vietnam,but risks remain to profitability,solvency,and liquidity 245.Looming Challenges Table3.A comparison of the depth of CPTPP and RCEP 55Table4.Adaptation costs given in EAP Country Nationally Determined Contributions(NDCs)submitted to COP26,2021 73Table5.Estimates of c

58、limate adaptation costs and financing needs in Vietnam,20112050 73Table6.Samoa estimated costs for adaptation,social resilience and mitigation 74Table B10.1.Valuing the triple dividend reveals the high returns to investment in different adaptation projects 77EAST ASIA AND THE PACIFIC ECONOMIC UPDATE

59、 APRIL 2023viiiLIST OF CONTENTSList of Boxes3.Global Conditions and EAP Growth in 2023 Box1.Country specific impacts of global shocks 13Box2.Chinas economic policy trade-offs 16Box 3.Economic prospects in Pacific Islands 18Box4.Idiosyncratic risks in the financial sector 254.A Long View of Growth an

60、d Structural Change Box5.Productive reallocation in EAP 36Box6.Correlates of structural reforms and per-capita income growth:Some circumstantial evidence 38Box7.Structural change 395.Looming Challenges Box8.Why are projected economic damages from climate change increasing so rapidly?70Box9.What is c

61、limate adaptation?72Box10.The triple dividends approach 77REVIVING GROWTHixLIST OF CONTENTSREVIVING GROWTHxiLIST OF ABREVIATIONSList of AbbreviationsAEAdvanced EconomyAFCAsian Financial CrisisCARCapital Adequacy RatioCBACost-Benefit AnalysisCOVIDCoronavirus DiseaseCPIConsumer Price IndexCPTPPCompreh

62、ensive and Progressive Agreement for Trans-Pacific PartnershipDBDefined BenefitDECDevelopment EconomicsEFIEquitable Growth Finance and InstitutionsEMBIEmerging market Bond IndexEMDEEmerging Markets and Developing CountriesEUEuropean UnionFDIForeign Direct InvestmentGDPGross domestic productGEPGlobal

63、 Economic ProspectsGFCGlobal Financial CrisisGTAPGlobal Trade Analysis ProjectGVCGlobal Value ChainHICHigh Income CountryICTInformation and Communications TechnologyIMFInternational Monetary FundIPEFIndo-Pacific Economic FrameworkIPOInitial Public OffersLMICLower Middle Income CountryNCDNon-Communic

64、able DiseaseNDCNationally Determined ContributionsNPLNonperforming loansOECDOrganisation for Economic Co-operation and DevelopmentppPercentage pointPMIPurchasing Managers indexPPPPurchasing Power ParityRCEPRegional Comprehensive Economic PartnershipRHSRight Hand SideROWRest of the WorldSMESmall and

65、Medium EnterpriseSOEState-Owned EnterpriseTFPTotal Factor ProductivityTPPTrans-Pacific PartnershipUHCUniversal Health CoverageUMICUpper Middle Income CountryVATValue Added TaxVARVector autoregressionWDIWorld Development IndicatorWEOWorld Economic OutlookWDRWorld Development ReportWTOWorld Trade Orga

66、nizationRegions,World Bank Classification and Country GroupsEAPEast Asia and PacificECAEastern Europe and Central AsiaLACLatin America and the CaribbeanMNAMiddle East and North AfricaSARSouth AsiaSSASub-Saharan AfricaCountry/Economy AbbreviationsCHNChinaFJIFijiFSMFederated States of MicronesiaHKGHon

67、g Kong SAR,ChinaIDNIndonesiaJPNJapanKHMCambodiaKIRKiribatiKORRepublic of KoreaLAOLao Peoples Democratic RepublicMNGMongoliaMMRMyanmarMYSMalaysiaNRUNauruPHLPhilippinesPICsPacific Island CountriesPLWPalauPNGPapua New GuineaRMIRepublic of the Marshall IslandsSLBSolomon IslandsTHAThailandTLSTimor-LesteT

68、ONTongaTUVTuvaluTWNTaiwan,ChinaUKUnited KingdomUSAUnited StatesVNMVietnamVUTVanuatuWSMSamoaEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023xiiLIST OF ABREVIATIONSCurrency UnitsBThai bahtCRCambodian rielDVietnamese dongF$Fiji dollarKMyanmar kyatKPapua New Guinea kinaKipLao kipPPhilippine pesoRMMa

69、laysian ringgitRMBChinese renminbiRpIndonesian rupiahSI$Solomon Islands dollarTogMongolian tugrikUS$Timor-Leste(U.S.dollar)US$United States dollarxiiiREVIVING GROWTHPreface and acknowledgmentsPreface and Acknowledgmentsthis report is a collective endeavor and involved several parts of the world Bank

70、 including the eaP,efI,Hd and sPJ.It was prepared by a team led by ergys Islamaj and aaditya mattoo.other members of the team were,carter Brandon,Yu cao,maggie chen,caroline gerd g de roover,daisuke fukuzawa,shafaat Yar khan,duong trung le,Yusha li,andrew d.mason,Veronica sonia montalva talledo,Phil

71、ip okeefe,agustin samano Penaloza,Jonathan timmis,Ikuko Uochi,and cecile wodon.Significant contributions to the report were made by Botir Baltabaev,Sebastian Eckardt,Pedro Miguel Gaspar Martins,Rafaela martinho Henriques,elitza mileva,gaurav nayyar,owen nie,robert Palacios,franz Ulrich ruch,kersten

72、kevin stamm,and katherine anne stapleton.we thank narita futoshi and chris Papageorgiou for sharing data on structural reforms.enkhzaya demid,Jun ge,and adam merican Bin mohd din helped extend data to latest available years.the following staff from the finance,competitiveness and Innovation Global P

73、ractice provided country-specific responses to the questionnaire on financial sector reforms in the region:abayomi a.alawode,salman alibhai,ratchada anantavrasilpa,soraya azhar,Botir Baltabaev,roselee shah Bin shaharu-din,Yroen guaya Bontigao melgar,michael corlett,tim l.de Vaan,nicolo fraccaroli,Uz

74、ma khalil,calvin Zif koenig,dara lengkong,Putri monicha sari,and radu tatucu.the work was coordinated by tatiana didier,cecile thioro niang,and Zafer mustafaoglu.manuela V.ferro provided valuable guidance and helpful comments.we are grateful for stimulating discussions and com-ments to ndiame diop,d

75、avid gould,samuel christopher Hill,Young eun kim,Patrick alexander kirby,lars moller,rinku murgai,Zafer mustafaoglu,gaurav nayyar,cecile thioro niang,tobias Pfutze,carolyn turk,dina Umali-deininger,ekaterine t.Vashakmadze,mara warwick and Hassan Zaman;staff of the eaP region who participated in the

76、review meetings on february 6 and march 1,2023,and the eaP regional management team meeting on march 9,2023.we greatly appreciate the support for dissemination provided by geetanjali chopra,mariana lucia de lama odria,mark felsenthal,Jerry kurniawan,and kym louise smithies.the following staff from t

77、he macroeconomics,trade and investment global Practice and the Poverty and equity global Practice prepared country-specific macroeconomic outlook pages:Dwi Endah Abriningrum,Vishesh Agarwal,Tanida Arayavechkit,kiatipong ariyapruchya,mehwish ashraf,mahama samir Bandaogo,Undral Batmunkh,nadia Belhaj H

78、assine Belghith,andrew Blackman,Yew keat chong,Ibrahim saeed chowdhury,kevin c.chua,souleymane coulibaly,andrea coppola,kevin thomas garcia cruz,somneuk davading,Quang Hong doan,kim alan edwards,karen annette lazaro enriquez,david m.gould,Indira Maulani Hapsari,Rashad Hasanov,Faya Hayati,Ahya Ihsan,

79、Assyifa Szami Ilman,Taufik Indrakesuma,Wendy Karamba,demet kaya,Yusha li,sodeth ly,dorsati madani,kemoh mansaray,wael mansour,Pedro miguel gaspar martins,elitza mileva,Jacques morisset,thi da myint,darian naidoo,shohei nakamura,konesawang nghardsaysone,Hoang the nguyen,thu-Ha thi nguyen,ruth nikijul

80、uw,samuel nursamsu,anthony obeyesekere,Yus medina Pakpahan,Utz Johann Pape,keomanivone Phimmahasay,ruslan Piontkivsky,sharon faye alariao Piza,warunthorn Puthong,ririn salwa Purnamasari,rong Qian,Habib rab,ratih dwi rahmadanti,thanapat reungsri,alief aulia rezza,anna robinson,sutirtha sinha roy,Jose

81、 luis diaz sanchez,apurva sanghi,shakira Binti teh sharifuddin,reshika singh,Bambang suharnoko sjahrir,lodewijk smets,katherine anne stapleton,ekaterine t.Vashakmadze,dung Viet do,Veronica sonia montalva talledo,sharad alan tandon,kathleen Victoria tedi,sailesh tiwari,kimsun tong,tuimasi radravu Ulu

82、,Phonthanat Uruhamanon,ralph Van doorn,matthew wai-Poi,Ikuko Uochi,samuel wills,and Judy Yang.the work was managed by sebastian eckardt and lars christian moller for the macroeco-nomics,trade and investment global Practice,and by rinku murgai for the Poverty and equity global Practice.Benoit Philipp

83、e marcel campagne,alexander Haider,monika anna matyja,and kristina catherine tan mercado made contributions to the model,table production,and assisting staff with their forecasts.Yulita sari soepardjo and Yu shang provided technical support.the report was edited and typeset by circle graphics,Inc.,r

84、eisterstown,md.xivEAST ASIA AND THE PACIFIC ECONOMIC UPDATE aPrIl 2023Preface and acknowledgmentsThroughout the report,geographic groupings are defined as follows:Developing East Asia and Pacific comprises cambodia,china,Indonesia,lao Peoples democratic republic(Pdr),malaysia,Mongolia,Myanmar,Papua

85、New Guinea,the Philippines,Thailand,Timor-Leste,Vietnam,and the Pacific Island Countries.the Pacific Island Countries comprise fiji,kiribati,the marshall Islands,the federated states of micronesia,nauru,Palau,samoa,the solomon Islands,tonga,tuvalu,and Vanuatu.the ASEAN member countries comprise Brun

86、ei darussalam,cambodia,Indonesia,lao Pdr,malaysia,myanmar,the Philip-pines,singapore,thailand,and Vietnam.the ASEAN-5 comprise Indonesia,malaysia,the Philippines,thailand,and Vietnam.the analysis in this report is based on the latest country-level data available as of march 24,2023.xvREVIVING GROWTH

87、SUMMARYSummaryEconomic activity in most of developing East Asia and Pacific(EAP)has recovered from the recent shocks,with goods exports and private consumption leading the way.However,output remains below pre-pandemic levels in many of the Pacific Island Countries.Inflation remains higher than targe

88、t ranges in some countries.Near-term growth will depend on:global growth,projected to be slower in 2023 than in 2022,though recent projections are more optimistic;commodity prices,which have moderated;and financial tightening,which is likely to continue in the face of inflationary pressures in the U

89、S.Taking a longer view of the more than two decades since the Asian Financial Crisis(AFC),growth in the developing economies of East Asia and the Pacific has been faster and more stable than in much of the rest of the world.The result has been a striking decline in poverty and,in the last decade,als

90、o a decline in inequality.During both the Great Recession and the COVID pandemic,the economies of the region proved more resilient than most.But it would be a mistake to let these achievements obscure vulnerabilities,past,present,and future.Looking back,sound macroeconomic management after the AFC w

91、as accompanied only to a limited extent by productivity-boosting structural reforms.The convergence of the EAP countries with high-income countries,which was previously faster than in other emerging market and developing economies,has recently stalled.Now,the damage done by the pandemic,war,and fina

92、ncial tightening to people,firms,and governments,threatens to reduce growth and increase inequality.The region must cope with these problems even as it faces up to the major challenges of de-globalization,aging and climate change,to which it is particularly susceptible because it has thrived through

93、 trade,is growing old fast,and is both a victim of and contributor to climate change.Four types of policy action are necessary.Macro-financial reforms to support recovery today and inclusive growth tomorrow.Structural reforms to boost innovation and productivity across the economy.Climate-related re

94、forms to enhance resilience through efficient adaptation.International cooperation on climate mitigation,and to ensure openness to trade,investment,and technology flows,ideally multilaterally,but also regionally and bilaterally.Overview Recent developmentsMost major economies in developing East Asia

95、 and Pacific(EAP)have recovered from recent shocks and are growing.However,output remains below pre-pandemic levels in most of the Pacific Island Countries(figure O1).Growth in the region has been driven primarily by strong private consumption and goods exports.But now there are signs of weakening d

96、omestic and foreign demand(figure O2).At the same time,macroeconomic policy was becoming less expansionary in most EAP countries.While China provided significant fiscal stimulus in 2022,fiscal support in other countries was diminishing.Even though interest rates were lower in EAP than in other emerg

97、ing markets and developing economies(EMDEs),they have recently been increasing(figure O3).FigureO1.Most major EAP economies have recovered and are growing,but output in most Pacific Island Countries is still not back to pre-pandemic levelsSource:Haver Analytics;World Bank.Note:B.Bars show the latest

98、 quarterly or annual GDP in 2022 relative to 2019 level.EAP:East Asia and Pacific,EMDE:Emerging Markets and Developing Economies.90022ChinaEAP excluding ChinaAdvanced EconomiesEMDE excluding EAPINDEX:100=201930 20 10 0 10 20 Vietnam China Kiribati Indonesia Malaysia Lao PDR Phi

99、lippines Nauru Cambodia Mongolia PNG Marshall Isl.Thailand Timor-Leste Vanuatu Tuvalu Tonga Micronesia Solomon Isl.Fiji Myanmar Samoa Palau Percent A.GDP growth in EAP and rest of the world B.GDP relative to pre-pandemicxviiREVIVING GROWTHOVERVIEWFigureO2.Domestic demand is moderating and goods expo

100、rts are decliningSource:Haver Analytics.Note:A.Philippines refers to auto sales.B.Goods export value indexed to 2019 average,seasonally adjusted,3 month moving average.ChinaIndonesiaMalaysiaPhilippinesThailandVietnam60 40 20 0 20 40 60 80 100 120 Oct-21 Feb-22 Jun-22 Oct-22 Feb-23 Percent 50 75 100

101、125 150 175 200 Feb-20 Jun-20 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Jun-22 Oct-22 Feb-23 Index World excluding EAPChinaIndonesiaMalaysiaPhilippinesThailandVietnamA.Retail sales(year-on-year growth)B.Goods exports(index)FigureO3.Most governments have had less expansionary fiscal policy,and began to tigh

102、ten monetary policy,in 2022 Source:Haver Analytics;World Economic Outlook Database,October 2022.Note:B.Figure shows average policy rates in the region.AE:Advanced Economies,EAP:East Asia and Pacific,EMDE:Emerging Markets and Developing Economies.A.Change in structural balance B.Policy rates543210123

103、ChinaPhilippinesIndonesiaMalaysiaThailand202020212022Percent of GDP024681012Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23AEEAPother EMDEPercentxviiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023PREFACE AND ACKNOWLEDGMENTS Prospects in 2023Three linked international developments are likely to shap

104、e external conditions for EAP economies.First,global growth in 2023 is projected to be slower than in 2022,even though recent projections have become more optimistic(figure O4).The likely slowdown in growth in advanced economies may be partially offset by signs of revival in Chinas growth.Second,com

105、modity prices have moderated recently,resulting in declining food and energy prices in several EAP countries.Finally,the continued inflationary pressures in the US are leading to tighter financial conditions not only in the US,but also in the EAP region.To address these inflationary pressures,some c

106、ountries in the region have raised domestic interest rates,which helped ease capital outflows and depreciation.However,further tightening in advanced economies could renew financial pressures in the regions economies.FigureO4.Global growth in 2023 is projected to be slower than in 2022 which,along w

107、ith monetary tightening,will affect growth in the regionSource:Haver Analytics,International Monetary Fund,World Bank.Note:B.Bar shows impact of the following shocks:one percentage point increase in China and US growth,25 bps increase in US 2-year interest rate yield,and 10percent increase in commod

108、ity prices.EAP:East Asia and Pacific,EU:European Union,PICs:Pacific Island Countries.A.2023 GDP growth forecast B.Impact of external shocks on GDP growth01234567WorldUSEUChinaEAPexcludingChinaPICs20222023Percent1.20.80.40.00.40.81.2US GDPChina GDPUS monetarypolicyCommoditypricePercentage point A lon

109、g viewThe countries in the East Asia and Pacific region have experienced two decades of faster and less volatile growth than other economies.During this period,all EAP transitioned to lower or upper middle-income status(figure O5).Behind the stable growth after the Asian Financial Crisis(AFC),was so

110、und macroeconomic management and a history of significant structural reforms.After the AFC,the region saw only limited structural reforms and therefore little productivity-enhancing structural change.In particular,a region that thrived through openness to trade and investment in manufacturing,remain

111、ed reluctant to liberalize its services sectors.However,the developing EAP catch-up with higher income countries has now stalled.After the Global Financial Crisis and in recent years,convergence has been statistically insignificant(figure O6).At the same time,productivity growth of many EAP economie

112、s has been declining(figure O7).The limited growth in labor productivity had been driven more by capital deepening than total factor productivity growth.xixREVIVING GROWTHOVERVIEWFigureO5.EAP countries have seen two decades of higher and less volatile growth than other economies,and all have transit

113、ioned either to lower or upper middle-income statusSource:Penn World Tables;World Development Indicators.Note:A.Bar height shows average annual growth rate;whiskers show average standard deviation.EAP:East Asia and Pacific,EMDE:Emerging Markets and Developing Economies.B.East Asia and Pacific countr

114、ies represented by red dots.GNI:Gross National income.LMIC=Lower Middle-Income class,UMIC=Upper Middle-Income class.42024681012EAPOther EMDEsAdvanced EconomiesPercent92019Volatility56789 log GNI per capita($,Atlas method)2019 log GNI per capita($,Atlas method)KHMTLSSLBPNGLAOKIR

115、VNMVUTPHLMNGFSMIDNWSMTONFJITUVMHLTHACHNMYS2019 LMIC 2019 UMIC thresholdthreshold2002 UMIC threshold2002 LMIC thresholdA.GDP growth and growth volatility B.Income group mobilityFigureO6.EAP convergence with high income countries,which was faster than in other countries,has recently stalledSource:Worl

116、d Development Indicators.Note:GDP per capita in PPP.The sample of countries used was restrained to those whose population is larger than one million people.Also,oil-rich countries were excluded.A.Convergence coefficient for rest of the world B.Convergence coefficient for EAP economies3.02.01.00.01.0

117、993520092013-coefficient3.02.01.00.01.0993520092013+-convergencexxEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023OVERVIEWThese trends in growth and productivity have coincided with a shift in the pattern of

118、structural change.At different stages between the 1950s and the late 1990s,the economies in the EAP region saw significant growth in manufacturing.However,between the Asian Financial Crisis and the Global Financial Crisis,the share of manufacturing in GDP peaked and began to decline in the early ind

119、ustrializers.Still-industrializing Cambodia and Vietnam were the exceptions to this trend(figure O8).The sectoral reallocation of labor underlying this pattern of structural change has not so far favored productivity growth.In Malaysia,Thailand,Indonesia and China,the shift of labor out of agricultu

120、re slowed down after the early 2000s,and workers primarily moved not into high productivity manufacturing and business services but into relatively low productivity trade and construction services.The fact that some of the latter services activities were associated with lower productivity in the rec

121、ent period may reflect the“informalization”and overcrowding of these sectors as they accommodated rural-urban migrants.In Cambodia,Vietnam,and until recently,Myanmar,which are still industrializing,movement out of agriculture was accelerating and oriented towards relatively high productivity manufac

122、turing and services(figure O9).The shift from manufacturing to services need not,however,be antithetical to productivity growth in future.The digital revolution,which received a boost during the pandemic,is transforming services sectors.More services are becoming internationally tradable and the eme

123、rgence of digital platforms is transforming even domestic services from retail and finance to transport FigureO7.And productivity growth has been decliningSource:APO Productivity Database,Penn World Tables;World Bank.Note:EAP excluding China shows weighted average of ASEAN-4 countries.TFP:Total Fact

124、or Productivity.0ChinaEAP excluding China7201219PercentCapital deepeningHuman capitalTFPLabor productivityCapital deepeningHuman capitalTFPLabor productivityContributions to labor productivity growthFigureO8.In recent years,the share of manufacturing in GDP declined in major EA

125、P economies(other than Cambodia and Vietnam),and of services in GDP increasedSource:GGDC/UNU-WIDER Economic Transformation Database(Kruse et al.,2022);GGDC 10-Sector Database.Note:Figure shows sectoral share in total value-added.Other EMDE shows 2575percentile of 20 major Emerging market and Develop

126、ing Economies outside EAP.AFC:Asian Financial Crisis.GFC:Global Financial Crisis.00708090642000200620122018Other EMDECHNIDNMYSTHAVNMKHMPHLOther EMDECHNIDNMYSTHAVNMKHMPHLOther EMDECHNIDNMYSTHAVNMKHMPHLPercentAFCGFC0554042198

127、8620122018PercentAFCGFC007080420200620122018PercentAFCGFCAgriculture Manufacturing ServicesxxiREVIVING GROWTHOVERVIEWSource:GGDC/UNU-WIDER Economic Transformation Database(Kruse et al.,2022);GGDC 10-Sector Database.Note:Size of circle represents

128、 employment share in the initial year.AgricultureBusinessConstructionFinanceManufacturingMiningRealestateTradeTransportUtilities251050510Change in employment shareAgricultureBusinessConstructionFinanceManufacturingMiningRealestateTradeTransportUtilities251050510Change in employ

129、ment shareLog of sectoral productivity/total productivityLog of sectoral productivity/total productivityB.Group B:EAP countries where workers were continuing to move to more productive manufacturing and services sectors(Vietnam,Cambodia,and Myanmar)19902004FigureO9.In major countries,workers moved m

130、ostly from least productive agriculture to below-average productivity services sectors,and not much to the most productive manufacturing and services sectorsAgricultureBusinessConstructionManufacturingMiningTradeTransportUtilities250510Change in employment shareAgricultureBusinessConstruc

131、tionFinanceManufacturingMiningRealestateTradeTransportUtilities250510Change in employment shareAgricultureBusinessConstructionFinanceManufacturingMiningRealestateTradeTransportUtilities250510Change in employment shareLog of sectoral productivity/total productivityLog of sectora

132、l productivity/total productivityLog of sectoral productivity/total productivityA.Group A:EAP countries where increase in manufacturing employment stalled(China,Thailand,Malaysia,Indonesia)020042004201820042018and tourism.These changes are contributing to increased productivity in service

133、s(figure O10).However,it is not yet clear though whether these changes will lead to an increase in employment not just of the skilled workers but of those with inter mediate skills who benefitted enormously from export-led industrialization.In any case,unleashing new technologies requires market-fri

134、endly reforms.EAP economies implemented significant structural reforms,beginning in the early 1980s until the early 2000s.The reforms were broad-based and covered multiple sectors such as manufacturing trade,domestic finance,and product markets,and contributed to per-capita income growth in the regi

135、ons economies(figure O11).However,the pace of reforms slowed down in most countries after the early 2000s.To an extent,the slowing reform was a consequence of signi ficant prior liberalization that left limited room for further reforms,especially the political difficult“last mile”improvements in pol

136、icy.Nevertheless,the latest available data across all reform areas suggest that there are still sizeable gaps in reforms of developing EAP countries relative to a sample of advanced economies,especially in the services sectors that are vital for future growth(figure O12).xxiiEAST ASIA AND THE PACIFI

137、C ECONOMIC UPDATE APRIL 2023OvErvIEwFigureO10.The adoption of digital technologies is likely to increase productivity in servicesSource:ILOSTAT,UN National Accounts,World Bank Enterprise Surveys,Nayar etal.(2021).Note:B.Website data for 2016 or most recent available year.2162024Event Week

138、sPercent of firms010,00020,00030,00040,00050,00060,00070,00080,00090,000020406080100Share of businesses with a website(%)Value Added per Worker(US$)A.Adoption of E-commerce technologies after COVID-19 B.Correlation between website use and labor productivity of retail firms00.10.20.30.40.5Marginal ef

139、fect of reforms(pcp)TradeReformsExternalFinanceReformsDomesticFinanceReformsProductMarketReformsFigureO11.Reforms contributed positively to GDP-per-capita growth in EAPSource:World Bank staffs estimates.Note:Sectoral reform indices are continuous indicators taking 0-1 value,following Alesina et al.(

140、2020).See text for details.Looming challengesDeeper reforms,more pro-active management and inter-national cooperation are needed especially because the world and the region are changing in ways that pose new challenges to growth.First,a region that reaped enormous benefits from trading in a relative

141、ly open,integrated global market governed by predictable trade rules,must now contend with protectionism,trade divisions and policy uncertainty.Second,the regions previously youthful population is now aging rapidly,affecting labor endowments,pension burdens,and health care needs.Third,the regions fo

142、ssil fuel-driven growth in a world that was slow to respond to the dangers of climate change,is now threatened by the consequences of global warming,and countries must invest in adaption while contributing to mitigate.Decoupling?The most immediate challenge for the region is the growing division bet

143、ween its two largest markets.On the face of it,the restrictions on bilateral trade imposed by the US and China could divert trade to third country competitors.However,at least four deeper problems are emerging.Politics,rather than economic fundamentals and predictable rules,are molding trade pattern

144、s and the resulting uncertainty could discourage investment in other countries.xxiiiREVIVING GROWTHOVERVIEW Divergent standards,such as in the differing approach to data flows across locations,could segment markets and prevent third countries from exploiting economies of scale in an integrated globa

145、l market.Export restrictions on ultimate destination,as well as import restrictions on ultimate source,can disrupt GVCs and third country trade.Perhaps most seriously,bilateral restrictions on technology flows and collaboration between large countries could reduce the global availability of knowledg

146、e.The increase in bilateral protection is affecting other economies either through trade diversion towards producers of substitute products or through production linkages with suppliers of inputs and complementary products.While China experienced more than a 4-percentage-point decrease in its share

147、of US imports during 20182022,with the largest decline in the electronics industry,economies such as Vietnam,Thailand,and Indonesia increased their share of US imports,also particularly in the electronics industry.In contrast,Japan,which has GVC production linkages with both the US and China,saw a s

148、light drop in its share of US imports(figure O13).FigureO12.Countries need to address the significant“reform gap”between EAP and advanced economiesSource:World Bank staff estimates,based on earlier work by Alesina etal.(2020).Note:Overall and sectoral reform indices are continuous indicators taking

149、a value in the 0-1 interval in 2020.A higher value indicates greater degree of liberalization(lower intensity of restrictions).00.20.40.60.81CambodiaMalaysiaThailandIndonesiaLao PDRMongoliaMyanmarFijiChinaVietnamUnited StatesSingaporeJapanReform IndexPhilippinesReform Index00.20.40.60.81MalaysiaPhil

150、ippinesIndonesiaThailandCambodiaLao PDRVietnamFijiMyanmarChinaSingaporeUnited StatesJapanMongoliaReform Index00.20.40.60.81MalaysiaPhilippinesThailandCambodiaIndonesiaChinaLao PDRVietnamUnited StatesJapanSingaporeReform Index00.20.40.60.81PhilippinesMalaysiaThailandIndonesiaLao PDRMyanmarFijiChinaVi

151、etnamMongoliaUnited StatesJapanSingaporeCambodiaC.Domestic finances reform index D.Product market reform indexA.Overall reform index B.Trade reform indexxxivEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023OVERVIEW543210123VNMTWNKORTHAINDIDNMEXKHMMYSPHLEURHKGJPNCHNAgricultureElectronicsMetalsMine

152、ralsTextilesOthersPercentage pointAgricultureElectronicsMetalsMineralsTextilesOthersIDNMYSTWNVNMKHMMEXTHAPHLHKGINDUSAEURJPNKOR543210123Percentage pointFigureO13.Exports of some EAP economies to the US and China increased after they imposition of trade restrictions on each otherSource:Customs data fr

153、om the US and China.Note:Figure shows sectoral decomposition of changes in the economys share of respective imports during 20182022.A.Changes in share of US imports,20182022 B.Changes in share of China imports,20182022FigureO14.Measures taken after 2018 adversely affected innovation of Chinese firms

154、 which had prior collaborations with the US,and of US firms which had prior collaborations with ChinaSource:Patent applications at EPO,WIPO and USPTO.Note:Event study plots of the patent applications of US(Chinese)firms with collaborations before 2018 with inventors in China(US).0.50.40.30.20.100.10

155、.20.30.40.520001820190.50.40.30.20.100.10.20.30.40.52000182019A.Chinese firms B.US firmsPotentially more important than the impact on trade may be the impact on knowledge.Bilateral restrictions on technology flows and collaboration between large countries

156、could reduce the global availability of knowledge.Initial firm-level evidence suggests adverse effects of recent restrictions on firms in both China and the US(figure O14).What happens to both Chinese and US innovation matters for other countries in the region.Innovation builds on prior knowledge an

157、d backward citations in patents can reflect which sources of prior knowledge are important.While still small xxvREVIVING GROWTHOVERVIEWFigureO15.The US and,increasingly,China are important sources of knowledge for other East Asia and Pacific countriesSource:World Bank staffs illustration.Note:The ch

158、art shows the source of backward citations(on the left hand side)for patent applications to EPO/USPTO/WIPO patent offices by assignees in EAP countries(on the right hand side).ChinaChina OthersAdvance EAPUnited StatesThailandMalaysiaSingaporeKorea,Rep.JapanPhilippinesChinaChinaOthersAdvance EAPUnite

159、d StatesThailandMalaysiaSingaporeKorea,Rep.JapanPhilippinesA.19962001 B.20142019compared to the advanced economies like the US,China has become an increasingly important source of knowledge for innovation in other EAP countries,using these citation measures.By 20142019,China reflected around 10 perc

160、ent of the prior knowledge used for Singapore or Thailand innovation(figure O15).How should third countries respond to these developments?A priority should be a reform of their own policies,discussed above,which can enhance their incomes in all states of the world(April 2022 EAP Economic Update(Worl

161、d Bank 2022c).International agreements can also help.Economic theory suggests that third countries benefit from being“hubs”rather than either“spokes”or members of exclusive trade blocs.That is,a country like Malaysia is better off having trade agreements with both China and the US rather than being

162、left out of any agreement or being part of an exclusive trade bloc.RCEP has helped deepen much of the regions integration with China;the CPTPP was meant to but failed to achieve integration with the United States and the proposed Indo-Pacific Economic Framework(IPEF)is not meant to be a traditional

163、trade agreement.Empirical analysis suggests that RCEP and the CPTPP together could more than offset global losses due to the US-China trade war,but not the individual losses of China and the United States,which risk becoming“spokes”because of the growing economic distance between them(figure O16).Ag

164、ingThe EAP region is also facing the economic challenge of aging faster and at lower levels of income than the currently richer and older OECD and ECA countries.The transition from aging to aged societies(i.e.,from reaching 7%of total population 65+to 14%in that cohort)is taking only 2025 years for

165、most East and Southeast Asian countries,in contrast to 50100+years in those other countries.EAP countries are also becoming aged societies at far lower income levels than their OECD counterparts,with PPP per capita GDP at peak working age shares between 10 and 40%of the level of the United States at

166、 the same point in demographic transition(figure O17).xxviEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023OVERVIEWFigureO17.EAP countries are aging faster than rich countries did,and the working age population will peak at lower levels of income per capitaSource:UN Population projections,2022,me

167、dium fertility variant.Note:A.Bars denote years realized or projected for the 65+share of population to go from 7%to 14%of total population.B.Bars denote realized or projected GDP per capita relative to the US when working age population(1565 cohort)reaches peak.Years0200ChinaMyanmarKorea

168、,RepThailandIndonesiaUnited StatesUnited KingdomJapanMalaysiaFranceVietnamRatio2008922009200920003080100United StatesItalyGermanyCanadaFranceUnited KingdomJapanAustraliaNew ZealandKorea,RepMalaysiaPhilippinesThailandChinaIndiaIndonesiaVietnamA.T

169、ransition from aging to aged societies(i.e.,from population 65+reaching 7%to 14%of total)B.GDP per capita at peak working age population relative to USFigureO16.The adverse effects of a trade and technological rift between large countries can be reduced by third countries forming(separate)trade agre

170、ements that ideally include each large countrySource:Drawing on Petri and Plummer(2020).Note:Bars depict changes in global income(billion US$)by 2030.“Business as before”assumes a return to a pre-trade war path.“Sustained trade war”assumes path defined by post-phase one tariffs.Bars show incremental

171、 effects of adding each policy to all previous policies.The policy denoted“India”involves adding India to the RCEP15 agreement to form RCEP16.CPTPP:Comprehensive and Progressive Agreement for Trans-Pacific Partnership.RCEP:Regional Comprehensive Economic Partnership.0.+147+186+53Trade warCPTPPRCEP15

172、India+53+209+1210301Trade warCPTPPRCEP15IndiaA.Business as before B.Under sustained trade warAgingPopulation aging may impact economic growth through the decline in the share of the working age population(typically defined as the population age 1564;figure O18).However,measures to encourage and help

173、 older people work could lessen the adverse impact.xxviiREVIVING GROWTHOvERviEwSource:ILO 2022 LHS and WHO RHS.FigureO18.Aging could reduce the share of the conventional“working age”population,unless older people(especially women)continue to workPercentage points25Timor-LesteNepalLao PDRP

174、NGPhilippinesCambodiaIndiaBhutanMongoliaMyanmarBangladeshMalaysiaIndonesiaAustraliaNew ZealandSri LankaVietnamJapanChinaThailandSingaporeKorea,RepWomenMen0 10 20 30 40 50 60 70 PercentChinaCambodiaFijiIndonesiaKorea,RepMalaysiaMongoliaMyanmarPNGPhilippinesThailandVietnamA.Change in population share

175、of people aged 1564B.Significant proportions of older people in EAP are still workingA.Incremental annual pension spending,2014 vs 2050B.Actual vs.actuarially fair contribution rates in contributory DB schemesFigureO19.Aging will increase spending on pensions,and requires bridging the gap between ac

176、tual and actuarially fair contribution ratesSource:World Bank 2016a.VietnamMalaysiaPhilippinesChinaIndonesiaCambodiaMyanmarThailandLao PDRPNGKorea,Rep.Hong Kong SAR,ChinaJapanPercent of GDP0123456IndiaVietnam(Man)Vietnam(Woman)IndonesiaThailandPakistanCambodiaLao PDR(Woman)Lao PDR(Man)Percent4030201

177、00RequiredActualPopulation aging could also strain fiscal balances on both the revenue and expenditure sides.On the expenditure side,the pressures on public finances will come from rising pension costs,health and long-term care spending,with the first the most pronounced.On the revenue side,the decl

178、ining size of working age population will shrink the contribution base from which pension,unemployment,and health insurance systems are financed in several major economies in the region.A solution is to increase current contribution rates and bring them closer to actuarially fair rates(figure O19).x

179、xviiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023OVERVIEWAging is also likely to drive up health and aged-care spending over time,but the public spending impacts are likely to be more modest,as aging is a less significant driver of healthcare costs.But aging populations with higher non-commu

180、nicable disease(NCD)prevalence and higher co-morbidities will accelerate the epidemiological transition.Structural reforms in the health sector will be needed to better prevent,control and manage NCDs across the lifecycle.Adapting to climate changeThe EAP region is particularly exposed to climate ri

181、sks,in part because of the high density of population and economic activity along the coasts.More than half of the annual losses from natural disasters worldwide occur in EAP(figure O20).Without major adaptation efforts,coastal,river,and chronic flooding alone could lead to GDP losses of 520percent

182、by 2100 in Indonesia,Vietnam,the Philippines,and China.Climate impacts are most pronounced across the PICs,where natural disasters are estimated to already cost the region over 2percent of GDP every year and sea level rise is likely to threaten the existence of entire low-lying atoll island nations(

183、Kiribati,Marshall Islands and Tuvalu).FigureO20.EAP countries are highly exposed to climate change impactsClimate Risk Index Ranking(19992019)1101120No data2Source:Germanwatch.The first pillar of climate adaptation is risk reduction,such as ex ante investments in infrastructure and agricu

184、lture,and policies to reduce risk such as regulating against construction in flood-prone areas and protecting nature that stabilizes hillsides and protect cities from storm surges.The second pillar are measures to manage risk,ranging from early warning systems to sovereign risk insurance and social

185、safety nets.Inherent in how governments assess these options is incorporating measures to incentivize private sector cost-sharing to the extent possible.xxixREVIVING GROWTHOVERVIEWFigureO21.Investing in adaptation will deliver a triple dividendAvoided LossesInduced Economic BenefitsSocial and Enviro

186、nmentalBenefitsInvesting in Adaptation Yields:=Triple Dividend Early warning systems save lives and assets and are worth at least 10 times their cost.Climate-resilient new infrastructure typically adds 3%to upfront costs but has benefit-cost ratios of 4:1.Reduced flood risks lower financial costs,in

187、crease security,and help induce high-value investment in cities.The Thames barrier induced development of Canary Wharfand East London Drip irrigation increases yields as well as reduces drought risk.Nature-based flood protection also increases biodiversity,makes air and water cleaner,offers recreati

188、on,and improveshealth.Mangrove protection and restoration abate coastal surges,support local fisheries and forestry,and store carbon.Combined benefits are up to 10 times greater than the costs.Source:World Bank staffs illustration.TableO1.Valuing the triple dividend reveals the high returns to inves

189、tment in different adaptation projectsForests and wild firesUrban flooding and drainageStormwater managementCoastal floodingUrban heat islands(Two U.S.cities in one study)DroughtTahoe National Forest(United States)Kunshan Forest Park(China)Princes Park(Australia)Felix stowe(United Kingdom)Washington

190、,DC PhiladelphiaNingxia(China)Project cost(US$million)4126.720.38382,3801,970Project benefits (US$million)22.959.712.7644.95,75010,78011,050Benefit-cost ratio5.749.61.931.86.94.55.6Source:World Resources Institute,2022.Globally and in EAP,there is under-investment in climate adaptation.Recent more d

191、etailed analysis of a range of adaptation investments shows that the returns on investment in adaptation can be much greater than simply the avoided losses.This analysis,referred to as the triple dividends,uses cost-benefit analysis(CBA)to properly estimate avoided losses(first dividend),induced eco

192、nomic or development benefits(second dividend),and additional social and environmental benefits(third dividend)of adaptation actions(figure O21).Empirical analysis of adaptation investments shows that each dividend is often significant.Recent analysis of seven different projects targeting different

193、categories of climate change impacts forests and wildfires,urban flooding and drainage,stormwater management,coastal flooding,urban heat islands,and drought shows that in all cases,valuing the three dividend types makes a significant difference in assessing total project benefits(table O1).xxxEAST A

194、SIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023OVERVIEWFigureO22.For example,all sectors will benefit from adaptation investments in the PhilippinesLow typhoon sensitivityHigh typhoon sensitivityLow typhoon sensitivityHigh typhoon sensitivityAgricultureEnergy and extractionBasic manufacturingAdvanced

195、 manufacturingConstructionPrivate servicesGovernment036912%change in output from baselineAgricultureEnergy and extractionBasic manufacturingAdvanced manufacturingConstructionPrivate servicesGovernment036912%change in output from baselineSource:World Bank Philippines Country Climate and Development R

196、eport(CCDR),2022.A.2030B.2040At the sector and macro levels,the benefits of adaptation investments are clear.For example,in Samoa,investing an additional 2percent of GDP in adaptation for the next five years would save about 4.5percent of 2021 GDP in output losses.In the Philippines,all sectors woul

197、d benefit from climate adaptation measures:investments of less than 1%of GDP would avoid losses of 12%of GDP in many sectors(figure O22).While decoupling,aging and climate change can reduce potential growth,structural reforms and climate adaptation can offset the adverse imp act.Policies that foster

198、 competition and allow for the mobility of labor and capital across different sectors could lead to productivity gains.Similarly,policies that reduce trade costs and improve the efficiency of financial and capital markets could stimulate investment and capital formation.Implementing such policies,un

199、der reasonable assumptions,could increase potential GDP growth by 0.15percentage point annually.Increasing labor force participation could add another 0.28 percentage point annually to potential growth.Moreover,adapting to climate change could mitigate the adverse impacts of climate change on total

200、factor productivity growth and add another 0.1percentage point per year to potential GDP growth over the next decade(figure O23).xxxiREVIVING GROWTHOVERVIEWPercent No agingEstimated potential GDP growth,202230 Aging Deglobalization ClimatechangePolicyreformsBoost from adaption to climate changeBoost

201、 from increased female labor force participationBoost from structural policies543210CapitaldeepeningTotal factorproductivityEmploymentHuman capitalPercent No agingEstimated potential GDP growth,202230 Aging DeglobalizationClimatechangePolicyreformsBoost from adaption to climate changeBoost from incr

202、eased female labor force participationBoost from structural policies543210CapitaldeepeningTotal factorproductivityEmploymentHuman capitalFigureO23.Aging,deglobalization and climate change can reduce potential growth,but reforms can offset the impactPotential GDP growthA.EAPB.EAP excluding ChinaSourc

203、e:World Bank staffs estimates.xxxiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 2023OVERVIEW1.Recent DevelopmentsEconomic activity in developing East Asia and Pacific(EAP)is recovering gradually.Chinas economy grew by only 3percent in 2022,much slower than the 8.4percent rebound in 2021,because C

204、OVID-related public health measures and weakness in the housing sector dampened economic activity.The rest of the region grew at an estimated 5.8percent,up from 2.6percent in 2021,supported by buoyant domestic and external demand(figure1A).However,recent high-frequency indicators suggest that growth

205、 momentum may be slowing,with weakening foreign demand for goods and moderating retail sales(figure1B).Economic activity remained subdued in the Pacific Islands for most of 2022 because of delayed border reopening and the impact of natural disasters in some countries.Figure1.Most major EAP economies

206、 have recovered and are growingSource:Haver Analytics;World Bank.Note:A.Real annual GDP indexed to 2019 level.B.Seasonally adjusted quarterly real GDP indexed to 2019-Q4 level.EAP:East Asia and Pacific,EMDE:Emerging Markets and Developing Economies.90022ChinaEAP excluding China

207、Advanced EconomiesEMDE excluding EAPINDEX:100=205Q4Q4Q4Q1Q2Q3Q420022EAP medianChinaIndonesiaMalaysiaPhilippinesThailandVietnamINDEX:100=2019Q4A.GDP growth in EAP and rest of the worldB.Quarterly GDP growth in EAPWhile output has surpassed pre-pandemic levels in most of the larg

208、er EAP economies,recovery has been uneven across the region.Output in China and Vietnam had already exceeded pre-pandemic levels in 2020 and is now about 15percent higher.By the end of 2022,Cambodia,Indonesia,Lao PDR Malaysia,Mongolia,the Philippines,and three Pacific Island countries(Nauru,Kiribati

209、,and Papua New Guinea)had also exceeded pre-pandemic levels of output.But output remains below pre-pandemic levels in several Pacific Island countries as well as in Myanmar,Thailand and Timor-Leste(figure2).The recovery has also been uneven across sectors.Information and communication technology,fin

210、ance and agriculture have experienced relatively strong growth.However,output in transportation,accommodation and catering sectors in the Philippines and Thailand,and construction and real estate in Malaysia and Philippines,is still well below pre-pandemic levels(figure3).Most recently,services sect

211、or has started to recover,benefitting from the release of pent-up demand amid economic reopening.Consumer price inflation(CPI)rose markedly during 2022 in most EAP economies,driven by rising energy and food prices,as well as idiosyncratic factors.Core and nominal CPI inflation have surpassed central

212、 banks target ranges 11.RECENT DEVELOPMENTSREVIVING GROWTHin most major EAP economies(figure4).While inflation has recently peaked in several economies,it continues to rise in the Philippines and Vietnam,and remains high in Lao PDR,Mongolia,and Myanmar.Chinas pace of poverty reduction slowed down in

213、 2022 because growth was slower(figure5).In the rest of the region,the rate of poverty reduction has been moderate.Even though economic growth in 2022 was higher than expected but so was inflation,raising concerns about the prospects of poverty reduction in the region.Overall,12 million people in th

214、e region are expected to escape poverty between 2022 and 2023 at the lower-middle income class poverty line(US$3.65/day,2017 PPP),whereas 36 million people are projected to escape poverty at the upper-middle income class poverty line(US6.85/day,2017 PPP).Figure2.But output remains below pre-pandemic

215、 levels in most of the Pacific Island CountriesSource:Haver Analytics;World Bank.Note:Bars show the latest quarterly or annual GDP in 2022 relative to 2019 level.Percent30 20 10 0 10 20 Vietnam China Kiribati Indonesia Malaysia Lao PDR Philippines Nauru Cambodia Mongolia PNG Marshall Isl.Thailand Ti

216、mor-Leste Vanuatu Tuvalu Tonga Micronesia Solomon Isl.Fiji Myanmar Samoa Palau Figure3.Manufacturing and digital services led recoveryCHNIDNMLSPHLTHAVNM7585955ManufacturingICT&financeWholesale&retail tradeAgricultureConstruction&real estateTransportation,accommodation&cateringIndex 2019Q4

217、=100Source:Haver Analytics.Note:Data as of 2022 Q4.Seasonally adjusted series.The bubble size shows the relative size of the sector.2EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20231.RECENT DEVELOPMENTSFigure4.Inflation remains high and higher than target ranges in several countriesSource:Haver

218、Analytics,World Bank.Note:B.Latest available(Feb 2023:China,Fiji,Indonesia,Lao PDR,Mongolia,Philippines,Thailand,Vietnam;Jan 2023:Cambodia,Malaysia;July 2022:Myanmar).Target refers to Central Bank target for each country.Malaysias target shows Central Bank forecast of 2023 inflation.20246810Feb-21Ju

219、n-21Oct-21Feb-22Jun-22Oct-22Feb-23ChinaIndonesiaMalaysiaPhillipinesThailandVietnamPercent051015202530ChinaFijiCambodiaMalaysiaThailandVietnamIndonesiaPhilippinesMongoliaMyanmarLao PDRModerateSubstantialHighPercent41.3 CPICore CPITargetA.CPI inflation(year on year)B.InflationA.Lower middle-income pov

220、erty line($3.65 per day in 2017PPP)B.Upper middle-income poverty line($6.85 per day in 2017PPP)Figure5.The number of poor in developing EAP countries is expected to decline in 2023Source:World Bank staffs estimations.Poverty estimates are based on growth forecasts,population projections,and historic

221、al growth elasticities of poverty.Note:Forecasts are based on GDP growth projections as of March 21,2023.US$3.65 per-person-per-day and US$6.85 per-person-per-day poverty lines(2017PPP)represent the typical value of poverty lines found in lower-middle-income and upper-middle-income countries,respect

222、ively.110 108 110 101 94 88 82 42 38 26 22 17 13 10 0 20 40 60 80 100 120 20022202320242025Number of people,millionsPre-Covid projections,EAP excluding China Pre-Covid projections,China Covid estimates,EAP excluding China Covid estimates,China 035020022202320242025Nu

223、mber of people,millionsPre-Covid projections,EAP excluding China Pre-Covid projections,China Covid estimates,EAP excluding China Covid estimates,China 308 314 320 315 308 300 293 348 333 287 267 238 212 189 3REVIVING GROWTH1.RECENT DEVELOPMENTS2.Drivers of Growth in 2022In 2022,three broad factors i

224、nfluenced economic growth in EAP countries:COVID-19 containment measures,external conditions,and the capacity of the government to provide support.Chinas economic activity was hampered by strict public health measures,while infections and border restrictions constrained activity in several Pacific I

225、sland economies.In most major EAP economies,the unexpectedly strong recovery of private consumption and sustained demand for EAP exports of manufactured goods and commodities fueled growth.Although tourism supported growth in countries like Thailand,the Philippines and many Pacific Islands,it still

226、remained below pre-pandemic levels across EAP countries by the end of 2022.Governments ability to provide continued policy support varied,with some becoming increasingly constrained by rising debt.Monetary policy remained supportive for most of the year,but rates have risen in recent months(figure6)

227、.Figure6.Domestic demand and exports drove growth in 2022Source:Haver Analytics.Note:Chinas private consumption includes government consumption.Decomposition of goods export is estimated from nominal trade statistics.20100102030Q1 Q2 Q3 Q4Q1 Q2 Q3 Q420222022Q1 Q2 Q3 Q42022Q1 Q2 Q3 Q42022202020212020

228、20220202120202021Q1 Q2 Q3 Q42022ChinaIndonesiaMalaysiaPhilippinesThailandPrivate consumptionPublic and private investmentManufacturing exportsCommodity exportsServices exportsNet export(for China)Government consumptionImportPercentage pointContribution to growth2.1.Domestic developments P

229、rivate consumptionPrivate consumption rebounded fast in the first three quarters of 2022 as most countries in the region lifted Covid-related restrictions.Driven by the rebound in private consumption,retail sales experienced strong recovery.However,recent data shows that retail sales have moderated

230、in many EAP economies,indicating less buoyant domestic demand(figure7).The moderation in retail sales may be attributed to a number of factors,notably a negative income effect from the recent surge in inflation which reduced consumers purchasing power and from weakening foreign demand for EAP export

231、s.42.DRIVERS OF GROWTH IN 2022EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20232.2.External environmentForeign demand for manufactured goods and commod ities in EAP countries has been a major driver of growth in the region.However,there are now signs that this demand is weakening,as reflected in

232、the decline in goods trade.Exports have fallen by more than 20percent from their peak in the second quarter of 2022 in Indonesia,Malaysia,China,and Vietnam(figure8A).The decline is due to a slowdown in global economic growth and weakened demand from major trading partners.High-frequency measures,suc

233、h as the new export orders PMI,suggest that the slowing down of goods trade is likely to continue(figure8B).An ongoing revival of tourism has helped services exports in the Philippines,Thailand and many Pacific Island countries Figure7.But consumer demand is now moderatingSource:Haver Analytics.Note

234、:Philippines refers to auto sales.604020020406080100120Oct-21Feb-22Jun-22Oct-22Feb-23ChinaIndonesiaMalaysiaPhilippinesVietnamThailandPercentRetail sales(year-on-year growth)A.Goods exports(index)B.New export orders PMIFigure8.But there are now signs of weakening foreign demand for goods.Source:Haver

235、 Analytics.Note:A.Goods export value indexed to 2019 average,seasonally adjusted,3month moving average.B.PMI New export order(50+=expansion),seasonally adjusted,3month moving average.50755200Feb-20Jun-20Oct-20Feb-21Jun-21Oct-21Feb-22Jun-22Oct-22Feb-23IndexWorld excluding EAPChinaIndonesia

236、MalaysiaPhilippinesThailandVietnam30405060Feb-21May-21Aug-21Nov-21Feb-22May-22Aug-22Nov-22Feb-23ChinaIndonesiaMalaysiaPhilippinesThailandVietnamIndex(figure9A).But tourist arrivals are still only about 50percent of what they were before the pandemic in most EAP economies.The recent reopening of Chin

237、as borders is expected to accelerate the recovery of tourism(figure9B).Fiscal and monetary policyAs the Covid-19 situation stabilized and economic activity resumed,governments in the region cut expenditure on support programs implemented during the pandemic.This decrease in support is leading to a d

238、ecline in disposable income of 5REVIVING GROWTH2.DRIVERS OF GROWTH IN 2022households and firms,which could dampen consumption and investment.Except for China,most major economies in the region are estimated to have a lower structural balance in 2022 compared to the previous year(figure10).As inflati

239、on continues to be a concern for policy makers,policy interest rates have been raised globally and in the EAP region.However,policy rates in the EAP region remain lower than in other EMDEs,and the rise in policy rates was milder(figure11).Economic performance in the regions was affected by growth in

240、 the US and China,commodity prices,and financial conditions in advanced economies.Strong growth in the US,helped by generous fiscal support in the aftermath of Covid-19,helped boost economic growth in the EAP region since 2021,although the effect waned as US growth moderated in late 2022.While China

241、s economic recovery in early 2021 benefitted the regions economies,its continued public health restrictions resulted in lower growth in 2022 in China and in the region.Tightened US monetary policy also appears to have negatively affected the region.While higher oil prices negative affected growth in

242、 oil importing economies such as the Philippines and Thailand,they helped support growth in economies such as Indonesia and Malaysia(figure12).Figure9.even as services exports and tourism reviveSource:Haver Analytics.Note:A.Services export value indexed to 2019Q4,seasonally adjusted.B.Tourist arriva

243、ls indexed to the corresponding month in 2019.A.Services exportsB.Tourist arrivals02040608001802019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2 2022Q3 2022Q4 CambodiaIndonesiaLao PDRMalaysiaPhilippinesThailandSolomon Isl.FijiChinaMongoliaSamoaIndex0204060801001

244、20140Feb-20Aug-20Feb-21Aug-21Feb-22Aug-22Feb-23CambodiaMalaysiaPhilippinesThailandVietnamFijiIndexFigure10.China provided significant fiscal support in 2022,but other governments had less expansionary fiscal policySource:World Economic Outlook Database,October 2022.543210123ChinaPhilippinesIndonesia

245、MalaysiaThailand202020212022Percent of GDPChange in structural balance6EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20232.DRIVERS OF GROWTH IN 2022Figure11.Monetary policy in EAP has been more supportive than in other EMDEs,but was beginning to tighten024681012Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22

246、Jan-23AEEAPother EMDEPercentSource:Haver Analytics.Note:Figure shows average policy rates in the region.EAP:East Asia and Pacific,EMDE:Emerging Markets and Developing Economies,AE:Advanced Economies.Policy ratesFigure12.Growth in the US has supported the regions economies in 2022,while China slowdow

247、n and financial tightening stemming from the US has hurt growth in the region864202462019q12019q22019q32019q42020q12020q22020q32020q42021q12021q22021q32021q42022q12022q22022q32022q4US GDP growthChina GDP growthUS monetary policy shockCommodity pricePercentage pointsSource:Haver Analytics;World Bank

248、staffs estimates.Note:The bars represent average of historical decomposition of each shock,estimated using a Bayesian structural vector autoregression(SVAR)model with stochastic volatility,as a deviation from a longer-run average.The model for each EAP country includes the following variables:US mon

249、etary policy reaction shock,US real GDP growth,China real GDP growth,commodity weighted prices for recipient country,recipient country real GDP growth,and recipient country exchange rate to the US dollar.EAP countries included in the estimation are Indonesia,Malaysia,the Philippines,and Thailand.The

250、 models are estimated from 2000Q1 to 2022Q4,except in Malaysia which starts in 2005Q1.The US monetary policy shock is based on Arteta,Kamin,and Ruch(2022)and captures changes in investors assessments that the Federal Reserves reaction function has become more hawkish.EAP excluding China7REVIVING GRO

251、WTH2.DRIVERS OF GROWTH IN 20223.Global Conditions and EAP Growth in 2023Slowing global growth,high commodity prices and financial tightening in advanced economies will continue to affect the regions economies both through real and financial channels in 2023(figure13).Figure13.Three linked internatio

252、nal developments will shape economic performance in the EAP countriesCommodity pricesExternal economicconditionsFinancial tighteningFinancial and price shocksEAP countryeconomicperformanceReal shocksGlobal growthSource:World Bank staffs illustration.3.1.Global growthGlobal growth prospects have impr

253、oved in recent months,aided by the reopening of the Chinese economy and strong services recovery in many economies.Manufacturing surveys for several major economies continue to indicate declining activity,but at a slower pace than previously.Forecasts for global growth in 2023 have been revised upwa

254、rds,reflecting better-than-expected growth in the United States and Euro area in 2022Q4 and an overall improvement in global sentiment(figure14).China and the US are a significant a source of final demand for the countries in the region.Figure15 shows how much economic activity in an EAP country is

255、exposed to shocks to domestic demand in specific foreign countries.Chinas importance as an ultimate destination has been growing and is now comparable to that of the US:about one-tenth of value added in Lao PDR,Malaysia,Myanmar,Thailand,and Vietnam is ultimately absorbed in China.8EAST ASIA AND THE

256、PACIFIC ECONOMIC UPDATE APRIL 20233.GLOBAL CONDITIONS AND EAP GROWTH IN 20230123456GlobalUnited StatesEUChinaOctober 2022 forecast(WEO)Early January forecast(GEP)Late January forecast(WEO)Percent404550556065Jan-21Jun-21Nov-21Apr-22Sep-22Feb-23China:manufacturing PMIChina:services PMIGlobal:manufactu

257、ring PMIGlobal:services PMIIndexFigure14.Global growth in 2023 is projected to be slower than in 2022 but prospects have recently improved relative to previous projectionsSource:Haver Analytics,International Monetary Fund,World Bank.Note:A.WEO:World Economic Outlook;GEP:Global Economic Prospects.B.C

258、hinas PMI reports official PMI.Global PMI reports JP Morgan/S&P Global PMI 50+=expansion.A.2023 GDP growth forecastB.China and global PMIFigure15.An increasing share of EAP countries value-added exports are absorbed in ChinaSource:OECD Trade in Value Added database.Note:The chart plots the domestic

259、value-added content of gross exports by major ultimate destinations.This measure includes direct and indirect value-added exports to a specific country,net of the value of imported inputs and exports to the country that are headed for other countries positioned downstream.00819

260、95200720000000018ChinaIndonesiaMalaysiaPhilippinesThailandVietnamLao PDRCambodia MyanmarChinaASEANUSAOthersPercent of GDPDomestic value-added content of gross exports9REVIVING GROWTH3.GLOBAL CONDITIONS AND EAP GROWTH IN 202

261、33.2.Commodity pricesCommodity prices soared following Russias invasion of Ukraine,squeezing Asias energy importers early last year.At the same time,soaring shipping costs raised the cost of imported goods,with particularly strong impacts on the Pacific Island Countries.But more recently,steady decl

262、ines in both these factors have taken pressure off current accounts and inflation(figure16).In early January,energy prices declined by nearly 9percent(month to month)for several reasons(World Bank Prospects Group Global Monthly,January 2023).Warmer-than-expected weather in Europe and the United Stat

263、es contributed to a more than 40percent(month to month)decline in natural gas prices.Reflecting easing concerns about energy shortages,coal prices also declined.Oil prices futures have decreased recently,showing that investors believe that oil prices will not be much higher than the current level fo

264、r the rest of 2023(figure17).In contrast,reflecting improved market sentiment following signs of a stronger than anticipated recovery in China,metal prices increased by 6percent in January(m/m).Agricultural commodity prices remained broadly stable in January,on average.Nevertheless,uncertainty remai

265、ns high as the war in Ukraine continues and the impact of the imposition of a price cap on Russian oil products is not yet clear.Food prices increased considerably across the regions economies in the past year.While they have moderated somewhat in several countries reflecting the decline in commodit

266、y prices,food prices have risen in recent months in the Philippines,Thailand,and Vietnam(figure18).3.3.Financial tighteningIn 2022,policymakers started reacting to increased inflation by increasing policy interest rates both globally and in the EAP region.This led to tighter financial conditions acr

267、oss advanced and developing economies.Despite an increasing trend,policy rates in the EAP region remain lower than in other EMDEs,but higher than in advanced economies(figure19).Financial conditions eased somewhat in early 2023,amidst signs of a slowdown in inflation in major economies.But recently

268、released data show that the US labor market remains strong.Headline,core and producer price inflation in the US declined only slightly in January(6.4percent,5.6percent and 6percent(y/y),respectively)and less than expected by markets.This muted deceleration in prices led to increased expectations for

269、 the Federal Reserves policy rate,which is now expected to peak between 5.25 and 5.5percent in mid-2023(figure20).Figure16.Commodity prices have recently moderatedSource:Haver Analytics.Commodity prices04080120160200Feb-18Aug-18Feb-19Aug-19Feb-20Aug-20Feb-21Aug-21Feb-22Aug-22Feb-23EnergyAgricultureM

270、etals and mineralsIndex:2010=100Figure17.Oil price futures have decreased recentlySource:Bloomberg.708090100Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23Oct-23Dec-23Dec-22Feb-23Actual priceUSD/bblOil futures10EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20233.GLOBAL CONDITIONS AND EAP GROWTH IN 2023Figure

271、18.Food and energy prices are beginning to ease in most EAP economies,but global price increases could revive inflationary pressuresSource:Haver Analytics.Chinas CPI weight is estimated.20246810Jan-21Jul-21Jan-22Jul-22Jan-23Jan-21Jul-21Jan-22Jul-22Jan-23Jan-21Jul-21Jan-22Jul-22Jan-23Jan-21Jul-21Jan-

272、22Jul-22Jan-23Jan-21Jul-21Jan-22Jul-22Jan-23Jan-21Jul-21Jan-22Jul-22Jan-23ChinaIndonesiaMalaysiaPhilippinesThailandVietnamFood&BeverageHousing&furnishingTransport&communicationOthersCPIPercentage pointCPI inflation(year-on-year)Figure19.Continued high inflation in the US is leading to further financ

273、ial tightening in the US as well as the EAP regionSource:Haver Analytics.Note:B.figure shows average policy rates in the region.024681012AEEAPother EMDEDec-19Dec-20Jan-23PercentHeadline CPI inflationCore CPI inflationFed funds target rate10-year treasury note yieldFeb-20 Aug-20 Feb-21 Aug-21 Feb-22

274、Aug-22 Feb-23 0246810PercentA.Inflation and interest rate in the USB.Interest rate across the world11REVIVING GROWTH3.GLOBAL CONDITIONS AND EAP GROWTH IN 2023Recent easing of financing conditions combined with interest rate hikes by central banks in the region as they tackle above-target inflation h

275、ave helped Asian currencies rebound,with most erasing about half of last years losses,which has eased pressure on domestic prices(figure21).But further increases in US interest rates will renew depreciation pressures in economies with a more constrained fiscal and monetary space,which could hurt eco

276、nomic activity.Estimating the effect of external developmentsA growth shock originating in China or the US would impact EAP economies through bilateral trade and financial flows,including foreign direct investment(FDI).Changes in growth in the US or China could also impact regional economies by affe

277、cting confidence and hence domestic consumption and investment.An unexpected one-off rise in US(Chinas)GDP growth rate of 1 percentage point would increase growth rate in the other developing EAP countries,on average,by an estimated 0.5(0.3)percentage points in the next year(figure22).Mongolia,the S

278、olomon Islands,Lao PDR,and Myanmar are especially exposed to China as a destination for exports and as a source of FDI.Unanticipated shocks to US monetary policy would also affect growth;a 25 basis points increase would lower growth by an estimated 0.5percentage points.Shocks to commodity prices wou

279、ld differ in effect on commodity-exporting and commodity-importing economies and the net effect for the region remains ambiguous(Box1).Figure20.Expectation of interest rate stays elevated until the end of 2023Source:Bloomberg;World Bank.2-year interest rates yield forecasts0246Oct-22Dec-22Feb-23Apr-

280、23Jun-23Aug-23Oct-23Dec-23Euro Area:Dec-2022US:Dec-2022Euro Area:Feb-2023US:Feb-2023PercentFigure21.Higher domestic interest rates have so far helped ease capital outflows and depreciation,but risks remainSource:Institute of International Finance,Haver Analytics.GFC(2008)Taper tantrum(2013)China del

281、everage(2015)Covid(2020)Fed tightening(2022)7060504030200304050Weeks since the beginningUSD,billions10Sep-20Dec-20Apr-21Jul-21Nov-21Mar-22Jun-22Oct-22Feb-23ChinaIndonesiaMalaysiaPhilippinesThailandVietnamLao PDRMyanmarMongoliaIndex,Sep 2020=100A.Equity and debt flows in EMDE(cu

282、mulative)B.Exchange rates(local currency to US dollar)12EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20233.GLOBAL CONDITIONS AND EAP GROWTH IN 20233.4.Outlook and risksGrowth in the EAP region is projected to accelerate from 3.5percent in 2022 to 5.1percent in 2023,about 0.5percentage points high

283、er than was expected in October 2022.The higher growth is mostly due to China,where activity is projected to rebound sharply to 5.1percent in 2023,from 3percent in 2022,following the economys swift reopening.Growth in the rest of the region is projected to slow to 4.9percent in 2023 from 5.8 percent

284、 in 2022,and down from 5 percent projected in October 2022(table1;figure 23).While domestic demand is expected to remain the primary driver of growth,high inflation is likely to dampen private consumption.Additionally,high household debt in some EAP countries could exacerbate the impact of high inte

285、rest rates,increase financial burdens,and further weigh on consumption.Private investment growth is also expected to be tempered by the high interest rate environment and uncertainty from external headwinds.Contributions from exports are expected to decrease due to the moderation in global growth re

286、sulting in a slowdown in external demand.Figure22.Growth in the region in 2023 will be influenced by global growth and monetary tighteningSource:World Bank staffs.Note:Bar show impact of the following shocks:one percentage point increase in China and US growth,25 bps increase in US 2-year interest r

287、ate yield,and 10 percent increase in commodity prices.Effects estimated using a structural Bayesian VAR model that includes the following variables:US monetary policy reaction shock,U.S real GDP growth,China real GDP growth,commodity weighted prices for recipient country,recipient country real GDP g

288、rowth,and recipient country exchange rate to the US dollar.EAP countries included in the estimation are Indonesia,Malaysia,the Philippines,and Thailand.The models are estimated from 2000Q1 to 2022Q4,except in Malaysia which starts in 2005Q1.The US monetary policy shock is based on Arteta,Kamin,and R

289、uch(2022)and captures changes in investors assessments that the Federal Reserves reaction function has become more hawkish.1.20.80.40.00.40.81.2US GDPChina GDPUS monetarypolicyCommoditypricePercentage pointImpact of 1 pp shock in China and US growth,25 bps increase in US 2-year yield,and 10 percent

290、increase in commodity pricesBox1.Country specific impacts of global shocksThe Bayesian VAR model used to decompose EAP output growth is based on World Bank(2016).The models for Indonesia,Malaysia,Philippines,and Thailand include the following variables:the US monetary policy reaction shock identifie

291、d in Arteta,Kamin,and Ruch(2022),U.S real GDP growth,China real GDP growth,export-weighted commodity prices for recipient country,recipient country real GDP growth,and recipient country US dollar exchange rate.For China,the model includes the US monetary policy reaction shock,US real GDP growth,Chin

292、a real GDP growth,Chinas export-weighted commodity prices,and Chinas exchange rate to the US dollar.The models are estimated from 2000Q1 to 2022Q4,except in Malaysia for which data starts in 2005Q1(figure B1.1).Since the period under review includes the COVID-19 crisis,whose unprecedented nature and

293、 size present possible modeling challenges,the model includes stochastic volatility.Stochastic volatility in the error structure is modelled as in Jacquier,Polson,and Rossi(1994)and a generic version of what is suggested in Lenza and Primiceri(2022).1(continued)1 The model is estimated using Bayesia

294、n techniques and the Minnesota prior with hyperparameters on the first lag coefficients at 0.8,on overall tightness at 0.1,on lag decay at 1.2,on the exogenous variable tightness at 100,and cross-variable weighting at 0.9.A total of 30,000 iterations are run,with the first 5000 discarded and only ev

295、ery 5th iteration kept.The model includes 4 lags.The prior mean on the residual variance(i.e.stochastic volatility)is 0 and the priors variance is 10000.13REVIVING GROWTH3.GLOBAL CONDITIONS AND EAP GROWTH IN 2023(Box 1.continued)Figure B1.1.Impact of different shocks on EAP GDPSource:World Bank staf

296、fs estimates.1.81.61.41.21.00.80.60.40.20.00.2MYSPHLTHAIDNCHNPercentage point0.20.00.20.40.60.81.01.21.41.6PHLMYSIDNTHACHNPercentage point0.00.20.40.60.81.01.2MYSTHAPHLIDNPercentage pointA.Impact of a 25 basis point reaction shock on EAP real GDP(peak response)C.Impact of a 1 percentage point China

297、GDP shock on EAP real GDP(peak response)B.Impact of a 1 percentage point US GDP shock on EAP real GDP(peak response)D.Impact of a 10%Commodity price shock on EAP real GDP(peak response)Percentage point0.20.10.00.10.20.30.40.50.6MYSIDNPHLCHNTHA14EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20233.G

298、LOBAL CONDITIONS AND EAP GROWTH IN 2023Table1.GDP growth forecast202020212022October 2022 forecast for 2023April 2023 forecast for 2023East Asia&Pacific1.37.23.54.65.1East Asia&Pacific(excluding China)3.72.65.85.04.9ASEAN-53.93.46.05.14.9Pacific Island Countries9.93.26.75.74.3China2.28.43.04.55.1Ind

299、onesia2.13.75.35.14.9Malaysia5.53.18.74.24.3Philippines9.55.77.65.85.6Thailand6.21.62.64.13.6Vietnam2.92.68.06.76.3Cambodia3.13.05.25.25.2Lao PDR0.52.52.73.83.9Mongolia4.41.64.75.55.2Myanmar3.218.03.03.0Papua New Guinea3.20.14.54.23.7Timor-Leste8.32.93.53.03.0Palau8.913.42.818.212.3Fiji17.05.116.17.

300、85.0Solomon Isl.3.40.64.12.62.5Tuvalu4.90.30.63.54.2Marshall Isl.2.21.11.52.21.9Vanuatu5.00.61.93.43.5Kiribati1.47.91.22.32.5Tonga0.52.72.03.23.0Samoa3.17.16.02.05.0Micronesia1.83.20.63.02.9Nauru0.71.53.01.91.0Source:World Bank;World Bank estimates and projections.Note:Percent growth of GDP at marke

301、t prices.Values for 2022 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,P

302、alau,and Republic of the Marshall Islands(October1September30);Nauru,Samoa,and Tonga(July1June30).Myanmar growth rates refer to the fiscal year from October to September.15REVIVING GROWTH3.GLOBAL CONDITIONS AND EAP GROWTH IN 2023The forecast assumes a pro-growth alignment of public health,regulatory

303、,and macroeconomic policy in China,but recognizes that policy makers face difficult trade-offs between reviving near term growth and ensuring that longer-term growth is inclusive,stable and sustainable(Box2).Monetary policy in China is expected to be supportive,but less so that in 2022.Fiscal policy

304、 is also expected to be expansionary but to a lesser extent in 2023 than 2022.In the rest of the region,the outlook assumes continued but more modest fiscal consolidation and further monetary policy tightening.Thailand and Mongolia are expected to benefit more from Chinas reopening because of their

305、dependence on China for tourism and exports,respectively.Thailands growth will increase to 3.6percent in 2023 from 2.6percent in 2022,driven by the strong pent-up demand in China.In Mongolia,a rapid recovery in mining production resulting from the removal of border frictions,some decline in coal inv

306、entories,and the commencement of the Oyu Tolgoi underground mining stage is expected to accelerate the economic growth to 5.2percent in 2023 from 4.7percent in 2022.Recovery in tourism is expected to boost growth in other tourism-dependent countries such as the Philippines and several Pacific Island

307、 countries(Box3).Figure23.GDP growth in 2022 and 2023 forecastSource:IMF,World Bank.Note:EAP:East Asia and Pacific,EMDE:Emerging Markets and Developing Economies,PICs:Pacific Islands Countries.01234567WorldUSEUChinaEAPexcludingChinaPICs20222023PercentBox2.Chinas economic policy trade-offsChinas poli

308、cy documents,including the Government Work Plan for 2023,have highlighted increasingly wider policy objectives,emphasizing economic growth alongside a range of economic,environmental,and social tar-gets.To achieve these multiple objectives,policymakers confront difficult policy trade-offs,some of wh

309、ich were exposed during the pandemic.Looking ahead,policy trade-offs could be eased through structural reforms.A large fiscal stimulus supported short-term growth during the pandemic but exacerbated pre-existing macroeconomic imbalances.Infrastructure spending was a key part of the stimulus but has

310、been facing diminishing returns and increased state sector indebtedness,especially at the subnational level,raising fiscal and financial risks(DRC and World Bank 2019).At the same time,relatively limited direct aid to households raised precautionary savings,from an already high pre-pandemic level,re

311、sulting in subdued consumption growth since 2020 which partly reversed macroeconomic rebalancing away from investment.Expanding the coverage and benefit adequacy of Chinas social safety nets and ensuring portability of benefits across provinces,would build automatic fiscal stabilizers that could dep

312、loyed during downturns while also contributing to reducing precautionary savings and rebalancing towards private consumption-driven growth.(continued)16EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20233.GLOBAL CONDITIONS AND EAP GROWTH IN 2023 To curb excessive leverage,the authorities imposed ti

313、ghter regulatory constraints on credit to property developers in 2020 but the ensuing real estate downturn slowed Chinas economic recovery.While the persistence and severity of the downturn prompted regulatory easing,corporate balance sheet weaknesses and excess capacity in some property markets con

314、tinue to weigh on the recovery of the sector.Accompanying short-term regulatory easing and liquidity support with more decisive efforts to develop a framework for dealing at scale with the debt overhang could help return the sector to more robust and sustainable growth while containing financial ris

315、ks.To rein in market power in Chinas tech sector,the authorities tightened regulatory measures,but higher regulatory uncertainty has dampened private investment and may undermine Chinas long-term strategy of building a high-tech and knowledge-based economy.In 2021,regulators aggressively tightened a

316、nti-monopoly provisions aimed at digital platforms.This sparked a significant deterioration in investor confidence and capital outflows from the sector.Since the end of 2022,the authorities have signaled less regulatory intervention.Ensuring greater regulatory predictability and transparency could h

317、elp address market distortions without inhibiting investment.State-owned enterprises(SOEs)have been assigned increased responsibility in supporting national development in recent years,but that may have come at a cost to productivity growth.SOEs have been tasked in recent years with multiple(and pos

318、sibly conflicting)objectives,such as stabilizing employment and leading sectoral restructuring,domestic innovation and industrial policy(Naughton,2018).Meanwhile,their financial performance has deteriorated since GFC(Brandt et al.2022),despite evidence of SOEs benefiting from lower financing costs.E

319、nsuring competitive neutrality,removing implicit guarantees,and fostering the orderly exit of unprofitable SOEs would enhance efficiency of capital allocation.To the extent that SOEs fulfill social responsibilities/public mandates,those activities should be compensated transparently to avoid distort

320、ions to competition,while remaining commercial operations should operate on a basis without crowding out the private sector.China has made an ambitious commitment to achieve carbon neutrality by 2060,but short-term priorities have delayed decarbonization.Following regional energy supply shortages wh

321、ich were in part triggered by aggressive decarbonization targets in 2021 and the sharp rise in global energy prices in 2022-concerns over energy security led to an increase in domestic coal production.Shifting from the use of administrative targets and quotas to more market-based instruments,includi

322、ng through continued electricity market reforms and a strengthened emission trading scheme(ETS)could help achieve a more efficient decarbonization path while ensuring reliable energy supply and security.(Box 2.continued)17REVIVING GROWTH3.GLOBAL CONDITIONS AND EAP GROWTH IN 2023Box3.Economic prospec

323、ts in Pacific IslandsThe 2023 economic outlook for the Pacific region is influenced by ongoing COVID-19 recovery efforts,border reopening,and decreasing global commodity and shipping prices.Palau and Fiji,which rely on tourism,are expected to continue their recovery in 2023,especially Palaus service

324、 sectors such as accommodation and transportation.However,the slower growth performance in 2022 will delay the closing of output gaps for most countries,except for Samoa and Palau,which are expected to reach their 2019 output levels after 2025(figure B3.1).Samoas rebound is expected to be slower due

325、 to a sluggish tourism recovery and delayed reopening compared to Fiji,while Palaus three-year recession has reduced its capacity for a quick recovery.Inflation rates are expected to ease in 2023,thanks to decreasing global commodity prices and shipping costs.Consumer prices in the Pacific have surg

326、ed due to rising commodity prices and global inflation.As of 2022Q3,inflation has been accelerating in most Pacific Island Countries(PICs)(figure B3.2),reaching nearly 15%in Samoa and Tonga,and over 10%in Palau and Solomon Islands.In Fiji,consumer prices are approaching 5%.The main drivers of inflat

327、ion have been food and transportation prices,fueled by the increasing costs of energy,food,and imports.Figure B3.1.GDP forecasts relative to 2019 levelSource:Country authorities and World Bank staffs estimates.70 80 90 100 110 120 130 2019 2020 2021 2022 2023 2024 2025 2026 Index(2019 GDP=100)Fiji P

328、alau Samoa Vanuatu Solomon Islands Marshall Islands Tonga Tuvalu Kiribati Micronesia LMICNauru UMIC(continued)18EAST ASIA AND THE PACIFIC ECONOMIC UPDATE APRIL 20233.GLOBAL CONDITIONS AND EAP GROWTH IN 2023Current account balances in Pacific Island Countries(PICs)are significantly influenced by exte

329、rnal donor flows and reflect the net impact of terms of trade shocks.Tourism-exporting PICs such as Fiji,Palau,Vanuatu,and Samoa continue to experience current account deficits due to slow recovery in tourism exports and rising import bills from higher commodity and shipping prices in 2022.Conversel

330、y,PICs that rely on oil and fish exports such as PNG,Nauru,Kiribati,RMI,FSM,and Tuvalu are benefitting from positive terms of trade and registered smaller deficits or surpluses in their current account.Remittances held up well during the pandemic and contributed to current account balances in severa

331、l countries including Fiji,Samoa,and Tonga.External grants play a crucial role in financing current account deficits and critical investment in human and physical capital in PICs.Fiscal policy was used to alleviate the impact of the pandemic and rising costs of living,as the PICs lacked independent

332、monetary policy.From January 2020 to September 2021,PICs spent an average of 13%of GDP on COVID-19 response measures.Fiscal assistance on healthcare averaged around 5%of GDP,while non-health support to households and businesses averaged around 8%of GDP(figure B3.3).(Box 3.continued)Figure B3.2.Consu

333、mer price inflationSource:Country authorities;World Bank staff estimate.50510152022Q122Q222Q322Q122Q222Q322Q122Q222Q322Q122Q222Q322Q122Q222Q322Q122Q222Q322Q122Q222Q3FijiPalauSamoaVanuatuSolomonIslandsMarshallIslandsTongaPercentage changeFoodTransportOtherHeadline(continued)19REVIVING GROWTH3.GLOBAL CONDITIONS AND EAP GROWTH IN 2023EAP annual median headline inflation is now expected to slow from 6