East Asia and Pacific economy to expand 7.4% in 2021 – World Bank

SINGAPORE (ICIS)–Economic growth in east Asia and the Pacific is projected at 7.4% in 2021, reversing an estimated contraction of 0.9% in 2020, led by a strong rebound in China, the World Bank said late on Tuesday.

Despite a recovery in domestic and global demand, regional activity is expected to remain somewhat relatively subdued, reflecting lasting damage caused by the coronavirus pandemic, it said in its latest Global Economic Prospects report.

Global economic output is expected to expand by 4% in 2021 before moderating to 3.8% in 2022, after shrinking by 4.3% in 2020, based on World Bank’s projections.

Growth in China is projected to accelerate to 7.9% in 2021 – one percentage point above the World Bank’s growth forecast in June last year – reflecting release of pent-up demand and a quicker-than-expected resumption of production and exports.

For the rest of the east Asia & Pacific region, the recovery is expected to be more protracted.

Following last year’s contraction, output in the region excluding China is expected to expand by 4.9% in 2021 and 5.2% in 2022, to a level around 7.5% below pre-pandemic projections.

Downside risks to the outlook include the possibility that the pandemic and its effects last longer than expected; the long-term damage from last year’s recessions is greater than expected; balance sheet stress intensifies; or the contraction in global trade is sharper and longer lasting, including because of a re-escalation of trade tensions.

“On the upside, the rapid deployment of highly effective vaccines could trigger a faster- and stronger-than-expected rebound in major economies and global demand,” the World Bank said.

“Even with social distancing, universal masking, and other pandemic-control measures, additional waves of contagion will remain a risk until widespread immunity or effective vaccination is achieved,” it added.

In China and Vietnam, which both have kept new infections at a low rate, GDP is estimated to have expanded by 2 and 2.8%, respectively, in 2020.

Growth in these two countries has been supported by quick and sustained resumption of production and exports, with additional boosts from stimulus-fueled public investments, and resilient foreign direct investment in Vietnam.

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.