Tuesday, the World Bank lowered its growth forecast for developing East Asia and said a strong growth in China would pave the way for the region's recovery.

The Washington-based World Bank forecast real GDP growth in developing East Asia to slow to 5.3% this year from 8% recorded in 2008. It was down from the bank's earlier forecast of 6.7% growth.

Weaker growth is expected to add the number of poor in the region. Nearly 10 million more people are expected to remain in poverty compared with 2008 forecasts, the Bank said in its latest East Asia and Pacific Update, titled 'Battling the Forces of Global Recession'.

There is no doubt that the East Asia and Pacific region is confronting very difficult times, said Vikram Nehru, the World Bank's Chief Economist for the region. The countries that are able to tackle short-term challenges while staying focused on longer-term priorities will likely emerge better placed after the crisis to resume growth, he added.

A return to stronger economic expansion in China next year should help support growth among the countries of the East Asia and Pacific region, but a sustainable recovery will ultimately depend on developments in the advanced economies, the World Bank report said.

Last month, in its China Quarterly Update, the World Bank had downgraded its forecast for China's growth to 6.5% this year from 9% recorded last year and an earlier forecast for 7.5% growth. The revision was mainly due to weak exports and slowdown in domestic demand.

The World Bank noted that China's the huge economic stimulus package of CNY 4 trillion will fuel a recovery, which is likely to begin this year and take full hold in 2010. China's stimulus package was the largest in the region at about 12% of 2009 GDP%.

The World Bank said China remains a bright spot in the region and the global economy amid signs that economic activity may be bottoming out. A recovery in China, likely to begin this year and take full hold in 2010, should contribute strongly to the region's recovery, it added.

Unless there is a further intensification of the contraction in global demand, or global financial tensions flare up again, growth in China will pick up in the second half of the year, partly offsetting the weak first half, the World Bank asserted. Late in March, the bank had forecast the global economy is expected to contract 1.7% this year.

Further, the Bank noted that fiscal stimulus packages can only partially offset the negative impact of the crisis on growth in most countries. The increased fiscal deficits and sizable principal repayments due will be a burden for some governments in the East Asia and Pacific region, the Bank warned.

Moreover, the World Bank said tightening domestic credit conditions and greater uncertainty about the global outlook are reducing investment and purchases of consumer durables in Indonesia. Due to the adverse conditions, the Bank forecast economic growth to slow to 3.4% in 2009, before a gradually recovering global economy in 2010 pushes growth back into the 5% range.

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