Vietnam Emerges as Asia's Growth Leader as China Slows

Published on September 29, 2022
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Food, fuel subsidies risk long-term distortion, warns World Bank

The World Bank downgraded its annual growth forecast for the Asia-Pacific; a region buoyed by Vietnam but not by enough to offset China's slowing economy.

In its latest economic forecast published Tuesday, the bank sharply downgraded China's growth to 2.8% from 5% in April. That slowed the region's forecast expansion to 3.2% for this year, down from 5% growth projected in April. The report covers East Asia, Southeast Asia and the Pacific islands, but excludes Japan and the two Koreas.

Vietnam is predicted to lead the region with annual growth of 7.2%, up from 5.3% in the April forecast. The outlook for Indonesia was unchanged at 5.1%. Excluding China, the region is expected to grow 5.3% in 2022, with projections lifted for Malaysia, the Philippines and Thailand.

"The big source of growth in the region today has been the release from the restrictions that countries were obliged to maintain, either through rules or the spontaneous restraints that people exercised on consumption during the COVID period," said Aaditya Mattoo, chief economist for East Asia and the Pacific.

Most of the region has reopened to travel and loosened pandemic restrictions, although China maintains its zero-COVID policy and imposes sporadic lockdowns in big cities. The Philippines, Thailand and Cambodia will return to pre-pandemic output levels by the year's end, the bank predicted. Output in China, which rebounded earlier to exceed pre-pandemic levels, continues to outpace the region despite slowing growth.

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