May 30, 2024
World Economy

World bank warns of slowing growth across the continent amid China slump

“Core inflation in the US and EU remains elevated, and labour markets remain tight, suggesting interest rates will remain higher than pre-pandemic levels in the foreseeable future,” the World Bank said of downside risks. “Political developments within countries as well as rising geopolitical tensions are fuelling uncertainty.”

The World Bank also aired a warning about the sharp increase in debt in the region, which keeps borrowing costs high and squeezes both consumption and investment. Corporate debt in China and Vietnam has risen by more than 40 percentage points of GDP since 2010 and exceeded the level in advanced economies, it said. Household debt in China, Malaysia and Thailand is also higher than those in other emerging markets.

On the external front, increased trade protectionism – mostly wielded by advanced economies – could hurt growth for developing East Asia and the Pacific as it limits access to key markets like the US, South Korea and Japan, and the firms receiving subsidies are potential competitors of the region’s firms, the World Bank said.

Almost 3000 new trade-distorting measures were imposed in 2023, three times as large as those in 2019, it said.


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