The East Asia and Pacific region continued to outpace global economic growth in 2024, though momentum has slowed compared to pre-pandemic levels, according to the World Bank’s latest East Asia and Pacific Economic Update.

The bank forecasts regional growth of 4.8% in 2024, with a slight dip to 4.4% expected in 2025. China’s economy, the region's largest, is projected to decrease from 4.8% in 2024 to 4.3% in 2025, driven by ongoing challenges in the property market, weak consumer confidence and broader structural issues such as an ageing population and global economic tensions, according to an October 7 World Bank Group (WBG) press release.

The release highlighted that growth in other regional economies is projected to rise from 4.7% in 2024 to 4.9% in 2025, spurred by increased domestic consumption, a recovery in goods exports and a rebound in tourism.

Among the major economies, Indonesia is expected to grow at or above pre-pandemic levels through 2025, while Malaysia, the Philippines, Thailand and Vietnam are projected to grow more slowly than before the pandemic.

The Pacific Island nations are expected to see economic gains of 3.5% in 2024 and 3.4% in 2025, largely driven by a recovering tourism sector. However, investment expansion across much of the region remains weak, the release noted.

“Countries in the East Asia and Pacific region continue to be an engine of growth for the world economy," said World Bank vice-president for East Asia and the Pacific Manuela Ferro.

"However, growth is slowing. To sustain strong growth over the medium term, countries in [the region] must modernise and reform their economies to adapt to evolving trade patterns and technological changes,” she added.

The report highlighted three key factors affecting the region’s economic trajectory: shifting trade dynamics, China’s deceleration and global policy uncertainty.

Recent trade tensions, particularly between the US and China, have created opportunities for countries like Vietnam to strengthen their participation in global value chains. Vietnamese firms exporting to the US saw faster expansion compared to those exporting elsewhere. However, tighter rules of origin regulations and export restrictions may limit these gains going forward, the release noted.

It said that China, traditionally a robust driver of regional economic activity, is now pulling its neighbours along less forcefully as its import demand weakens. In the first seven months of the year, China’s imports grew by just 2.8%, significantly lower than the 6% annual growth seen over the past decade.

Additionally, global economic and geopolitical uncertainty continues to pose risks to the region. Increased economic policy unpredictability could lead to reduced industrial production and stock market performance in the region, with potential declines of 0.5% and 1%, respectively, the WBG said.

The report’s Special Focus delves into the impact of new technologies like industrial robots, artificial intelligence (AI) and digital platforms on the region’s labour market. Between 2018 and 2022, the adoption of robots in ASEAN-5 countries (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) created an estimated two million jobs for skilled workers, while simultaneously displacing approximately 1.4 million low-skilled workers.

Despite the dominance of manual labour in the region, fewer jobs are directly threatened by AI when compared to advanced economies. However, the region may struggle to fully harness the productivity benefits of AI, as only about 10% of jobs in East Asia and the Pacific involve tasks complementary to AI, compared to 30% in more developed nations, according to the WBG.

“East Asia’s growth model, which has traditionally relied on open markets and labour-intensive production, is under pressure due to trade tensions and the rise of new technologies,” said World Bank chief economist for East Asia and the Pacific Aaditya Mattoo.

“The best course of action is to deepen trade agreements and equip workers with the skills needed to capitalise on these new technologies,” he added.