HONG KONG -- The World Bank raised its growth forecast for the developing economies of East Asia and the Pacific on Wednesday but warned that risks included rising protectionism and escalating tensions over North Korea.
In an update to its annual economic outlook, the bank forecast economic growth of 6.4 percent for the region this year, then easing to 6.2 percent in 2018.
The World Bank said it tweaked its forecasts to reflect stronger than expected growth this year in China — Asia's biggest economy — before a gradual slowdown next year.
In its previous forecast in April, the Washington, DC-based lender projected a 6.2 percent expansion in 2017 and 6.1 percent for 2018. The report covers 15 countries including China, Thailand, Vietnam, Malaysia and the Philippines.
While the outlook is broadly positive, the bank said growing protectionism could chill world trade, citing proposals for changes to the North American Free Trade Agreement that would restrict or discourage imports and increasing uncertainty about access to the British market as Brexit talks get underway.
Furthermore, "geopolitical tensions in the region are rising and could escalate into armed conflict," the report said, referring to United Nations sanctions on North Korea in response to its nuclear and missile tests. Some world powers are urging even tougher measures, including possible military action, to stop Pyongyang from developing its nuclear capabilities, it said.
"Escalation of these disputes could have serious economic consequences," the World Bank said.
East Asia's crucial position in global shipping and manufacturing supply chains means flaring tensions could disrupt trade flows and economic activity, it said, adding that the tendency for global investors to pull their money during political crises could pressure exchange rates and raise world interest rates. Commodity prices could also spike because of worries about supply disruptions, the report said. (AP)