World Bank Cuts East Asia Growth Forecast as Chinese Economy Slows

The World Bank has slashed growth estimates for East Asia and the Pacific region as the Chinese economy struggles on weak global and domestic demand.

In its East Asia and Pacific Economic Data Monitor, the financial institution says the growth of East Asia and Pacific economies may decline to 7.2 percent this year from 8.2 percent in 2011, before picking up to 7.6 percent in 2013.

According to the report, weakening exports and investments will pull back China's economic growth to 7.7 in 2012 from 9.1 percent in the previous year. Spending plans announced by Chinese regional governments could also be hit by funding constraints.

However the country's economy may recover to 8.1 percent growth in 2013 as the impact of the financial stimuli becomes more visible.

The bank had forecast a GDP rate of 8.2 percent in 2012 and 8.6 percent in 2013 for China earlier this year.

World Bank's East Asia and Pacific Regional Vice President Pamela Cox said even though the region is reeling under the pressure of global slowdown "compared to other parts of the world, it's still growing strongly, and thriving domestic demand will enable the region's economy to bounce back to 7.6 percent next year."

Thailand's recovery efforts after the severe floods in the previous year have boosted demand in the region, while countries like Indonesia and Malaysia have benefited from government and private sector spending, the report says.

The recent surge in global food prices may not affect East Asian and Pacific countries either, as the price of rice remains under control.

The bank notes that concerns on the global economy have eased following the recent monetary easing measures from the European Central Bank and the US Federal Reserve.

But it warns that if the European debt crisis deepens, developing economies in East Asia and the Pacific will be severely affected and advises policy makers in the region to continue focus on managing growth and reducing poverty.