1、SERVICES FOR DEVELOPMENTWORLD BANK EAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023WORLD BANK EAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023Services for Development 2023 International Bank for Reconstruction and Development/The World Bank1818 H Street NW,Washington,DC 20433Telephone:20

2、2-473-1000;Internet:www.worldbank.orgSome rights reserved1 2 3 4 26 25 24 23This work is a product of the staff of The World Bank with external contributions.The findings,interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank,its Board of Execut

3、ive Directors,or the governments they represent.The World Bank does not guarantee the accuracy,completeness,or currency of the data included in this work and does not assume responsibility for any errors,omissions,or discrepancies in the information,or liability with respect to the use of or failure

4、 to use the information,methods,processes,or conclusions set forth.The boundaries,colors,denominations,and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such bou

5、ndaries.Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank,all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attribution 3.0 IGO license(CC BY

6、3.0 IGO)http:/creativecommons.org/licenses/by/3.0/igo.Under the Creative Commons Attribution license,you are free to copy,distribute,transmit,and adapt this work,including for commercial purposes,under the following conditions:AttributionPlease cite the work as follows:World Bank.2023.Services For D

7、evelopment.World Bank east asia and Pacifjc economic Update(October).Washington,DC:World Bank.doi:10.1596/978-1-4648-2028-1.License:Creative Commons Attribution CC BY 3.0 IGOTranslationsIf you create a translation of this work,please add the following disclaimer along with the attribution:This trans

8、la-tion was not created by The World Bank and should not be considered an offjcial World Bank translation.The World Bank shall not be liable for any content or error in this translation.AdaptationsIf you create an adaptation of this work,please add the following disclaimer along with the attribution

9、:This is an adaptation of an original work by The World Bank.Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank.Third-party contentThe World Bank does not necessarily own each component of the c

10、ontent contained within the work.The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties.The risk of claims resulting from such infringement rests solely with you.If you

11、wish to re-use a component of the work,it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner.examples of components can include,but are not limited to,tables,fjgures,or images.All queries on rights and licenses should be

12、 addressed to World Bank Publications,The World Bank Group,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.ISBN(electronic):978-1-4648-2028-1DOI:10.1596/978-1-4648-2028-1cover photo:asian young woman paying with smartphone in a caf by asia-Pacifjc Images Studio Getty Images.us

13、ed with the permission of Getty Images.Further permission required for reuse.SERVICES FOR DEVELOPMENTiiiLIST OF CONTENTSContentsPreface and Acknowledgments xiList of Abbreviations xiiiOverview xv1.Recent Developments and Outlook 11.1.Recent developments 11.2.Determinants 21.3.Outlook and risks 111.4

14、.Macro financial policies 132.Special Focus 232.1.Introduction 232.2.What is happening?282.3.Why do digitalization and services reforms matter?362.4.What should be done?55References 81Annexes 87 EAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023ivLIST OF CONTENTSList of FiguresOverviewFigureo1.M

15、ost major eaP economies have recovered and are growing,but at a slower pace xvFigureo2.external and domestic factors are shaping near-term economic performance in the eaP countries xviFigureo3.Global growth slowdown,financial tightening and protectionist measures are affecting economic performance i

16、n the EAP countries xviFigureo4.Government and private debt has increased across the region xviiFigureo5.Fiscal policy has become less expansionary in most countries,while monetary policy has tightened in the region,except in China and Vietnam xviiiFigureo6.Goods exports have been declining while to

17、urist arrivals have largely recovered xviiiFigureo7.electronics and machinery exports of china and aSeaN to the uS declined after the introduction of the CHIPS and IRA Acts in August 2022 xixFigureo8.Recent trends in retail sales are flatter than pre-coVID trends xixFigureo9.Private investment as a

18、share of GDP has been lower in recent years than pre-pandemic levels in most EAP economies xxFigureo10.consumer confidence in china has declined and policy uncertainty has hurt investment in specific sectors xxiFigureo11.Growth prospects are higher than in other emerging markets but have weakened si

19、nce the previous forecast xxiiFigureo12.Services overall are key contributors to aggregate productivity growth xxiiiFigureo13.Services outpaced Manufacturing in terms of growth of Trade and FDI in recent years xxiiiFigureo14.Services tend to be less carbon-intensive,except for transport xxivFigureo1

20、5.Services for development-the virtuous cycle of opportunity and capacity:an organizing framework xxvFigureo16.Services firms use more digital technologies;especially when foreign-owned and with access to broadband;digital technologies are associated with higher levels of productivity xxvFigureo17.S

21、ervices liberalization increased firms labor productivity in both services and downstream manufacturing firms xxviFigureo18.In Indonesia,digital jobs often require higher level of education and dominate in more technical service sectors xxviiFigureo19.existing studies show that digital technologies

22、improve education outcomes when complemented by education reform xxviiFigureo20.Most eaP countries restrict services trade more than other countries at comparable levels of development xxviiiFigureo21.Mobile broadband access has improved in most countries,but mobile does not offer the potential spee

23、d of fixed broadband,access to which remains limited and unequal xxviiiFigureo22.Tertiary enrollment rates have increased in the eaP region but remain low in most countries,with the private sector playing a limited role xxixFigureo23.cooperation in cross-border data flows:eaP countries take a hetero

24、geneous regulatory approach to international data transfers xxix1.Recent Developments and Outlook FigureI.1.Most major eaP economies have recovered and are growing,but at a slower rate 1FigureI.2.output in most major eaP economies is now above pre-pandemic levels,but not in many Pacific Island Count

25、ries 2FigureI.3.IcT and finance are growing rapidly,other services are recovering,manufacturing is slowing down 2SERVICES FOR DEVELOPMENTvLIST OF CONTENTSFigureI.4.The number of poor in developing eaP countries is expected to decline in 2023 3FigureI.5.Private consumption and services exports have s

26、ustained growth,amidst weak private investment and goods exports 3FigureI.6.external and domestic factors are shaping economic performance in the eaP countries 4FigureI.7.Global growth slowdown,financial tightening and protectionist measures are shaping economic performance in the EAP countries 4Fig

27、ureI.8.Growth in the region is influenced by growth in the regions largest trading partners and monetary tightening in the US 5FigureI.9.Government debt has increased across the region and corporate and household debt remains high in some countries 5FigureI.10.Fiscal policy in 2023 is less expansion

28、ary than in the 2020-2022 period in most countries 6FigureI.11.Monetary policy has tightened in the region,except in china and Vietnam 7FigureI.12.Goods exports have been declining while tourist arrivals have largely recovered 7FigureI.13.electronics and machinery exports of china and aSeaN to the u

29、S declined after the introduction of the CHIPS and IRA Acts in August 2022 8FigureI.14.Recent retail sales data suggest divergence from pre-coVID trends 8FigureBI.1.consumer confidence index 9FigureBI.2.contributions to growth in disposable income(percentage points y/y)9FigureBI.3.Fixed asset invest

30、ment growth by sector 10FigureBI.4.Impact of economic policy uncertainty on firm investment 10FigureI.15.Public investment has supported growth,whereas private investment as a share of GDP is lower than pre-pandemic levels in most EAP economies 11FigureI.16.cPI inflation is declining;PPI shows defla

31、tionary pressures 12Figurea1.1.The regions exports have declined while regional policy uncertainty has increased 16Figurea1.2.correlates of private investment growth in emerging markets and developing economies 17Figurea2.1.conditional correlation between private consumption growth,house prices,work

32、ing age population and rising household debt 19Figurea3.1.Impact on annualized GDP growth in 2024 from a consumption slowdown in china 20Figurea3.2.Impact on annualized GDP growth in 2024 from a weaker residential investment in china 212.Special Focus FigureII.1.Services for development-the virtuous

33、 cycle of opportunity and capacity:An organizing framework 23FigureII.2.Share of services in employment and value added increased significantly in recent years 25FigureII.3.labor reallocated to less productive sectors.In aggregate,services are important contributors to productivity growth 25FigureII

34、.4.an increase in the use of Finance,IcT and Business services is associated with higher labor productivity in manufacturing and agriculture,even after controlling for the level of development 26FigureII.5.Services outpaced manufacturing in terms of growth of trade and FDI in recent years 26FigureII

35、.6.Trade in digitally delivered services increased more than other sectors in recent years 27FigureII.7.Demand for services rises with income level 27FigureII.8.Structural transformations towards services shift demand towards higher educated workers 28FigureII.9.The services sector has higher female

36、 employment shares than manufacturing 28FigureII.10.Services are generally less carbon intensive than agriculture and manufacturing(except in transport)29FigureII.11.uneven use of data technologies across services sectors in the Philippines 30FigureII.12.FDI plays a crucial role in diffusion of data

37、 technologies in Philippines services firms,especially when complemented with high-speed broadband 30EAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023viLIST OF CONTENTSFigureII.13.china dominates the region in number of digital businesses and venture capital funding 31FigureII.14.Most eaP count

38、ries do slightly better in terms of funding than predicted by their level of development,controlling for size 31FigureII.15.e-commerce,FinTech and MobilityTech attract high shares of venture funds both in developing EAP and in developed countries 32FigureII.16.Developed countries funds are more conc

39、entrated on average in B2B and developing country funds more in B2C 32FigureII.17.Platform business is expanding rapidly in eaP 33FigureII.18.The size of the platform economy is still modest but increasing rapidly(now between 5 to 7 percent of GDP)33FigureII.19.Internet access is unequal among ea P

40、countries,with strong urban-rural,income and education divides 34FigureII.20.Service trade restrictions decreased after 2008 35FigureII.21.Technology adoption increases services firms productivity,value-added and wages,but reduces in employment 36FigureII.22.Rapid diffusion of online retail and tran

41、sport platforms in the Philippines 37FigureII.23.online platform diffusion increases the productivity and scale of incumbent services firms in these same sectors,and leads to larger productivity gains in downstream sectors 38FigureII.24.Platforms improve productivity,but the effects depend on compet

42、ition and regulation 38FigureII.25.Service Trade Reforms increase productivity 39FigureII.26.Services trade liberalization have direct and indirect productivity gains 40FigureII.27.Relaxing restrictions to services FDI are associated with increased manufacturing productivity 40FigureII.28.Number of

43、digital labor platforms for(i)locally-delivered and(ii)digitally-delivered services have increased significantly.Jobs obtained through digital labor platforms represent a non-trivial share of the workforce 41FigureII.29.Platform jobs for digitally-delivered services often require higher education.Th

44、ose for locally-delivered services are dominated by less-educated workforce 42FigureII.30.Job postings on major labor platforms for digitally-delivered services have increased,especially for skilled-intensive services tasks 42FigureII.31.Indonesia focus:work involving digital technologies is growing

45、 rapidly 43FigureII.32.In Indonesia,digital jobs often require higher level of education and dominate in more technical service sectors 43FigureII.33.Indonesia focus:digital jobs earn a wage premium,which increases over time 44FigureII.34.Significant gaps in foundational learning outcomes exist betw

46、een high-and middle-income countries in the region and among students of varying socio-economic statuses 46FigureII.35.existing studies from middle income countries in the eaP region show large variation in effect sizes on student learning of EdTech programs(0.07 SD to 0.98 SD)46FigureBII.2.1.Integr

47、ated care delivery in Henan province,china(20082014)49FigureBII.2.2.Impact of the integrated care delivery in Henan province,china(Shi et al.,2015)50FigureII.36.Situation of health information technology in eaP countries 51FigureII.37.adults who made or received a digital payment in the past year(20

48、21)52FigureII.38.leapfrogging in the adoption of digital finance 53FigureII.39.Digitalization of private sector wage payments across the ea P region(%),2021 54FigureII.40.usage of fintech credit 54FigureII.41.Most eaP countries restrict services trade more than other countries at comparable levels o

49、f development 56FigureBII.4.1.contribution of services to employment in PIcs and PNG 58FigureBII.4.2.PIcs services imports are concentrated in transport,travel,and other business services 58SERVICES FOR DEVELOPMENTviiLIST OF CONTENTSFigureBII.4.3.STRI outcome in the PIcs by Broad Sectors 59FigureBII

50、.5.1.Impact of public service act reform on productivity 63FigureII.42.Digital platforms-benefits and risks 66FigureII.43.Digital antitrust cases in ea P and other regions(cumulative as of Sep.2023)67FigureII.44.evolution of conglomerate Digital Mergers,20122021 68FigureII.45.emerging signs that sev

51、eral eaP countries are struggling to keep up with the pace of demand for high-skilled employment 70FigureII.46.Most eaP countries have levels of tertiary education enrollment smaller than countries at similar levels of development,except Korea,Rep.,China and Mongolia 71FigureII.47.enrollment in priv

52、ate universities:large in Indonesia and Philippines(but decreasing),small in Vietnam and Thailand(but increasing)71FigureII.48.eaP countries register still low level of digital skills,both basic and advanced,if compared to developed Asian economies 72FigureII.49.Internet usage(2022)73FigureII.50.Fix

53、ed and mobile broadband Internet in ea P:access,quality,and cost 74FigureII.51.Internet connection speed within and across ea P countries 75FigureII.52.Regulatory approaches in selected eaP countries 77FigureII.53.GHG emissions reductions in international shipping from 20082050 79Annexes Figurea3.1.

54、Tourism as a share of GDP and employment in 2019,selected low-and middle-income countries in EAP 91Figurea3.2.Share of hotels using Property Management Systems(PMS)92Figurea3.3.Performance difference by property management digitalization degree 92EAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 202

55、3viiiLIST OF CONTENTSList of TablesOverviewTable O1.GDP growth forecast xxi1.Recent Developments and Outlook TableI.1.GDP growth forecast 12TableI.2.Financial sector is well-capitalized except for Vietnam,but risks remain to profitability,solvency,and liquidity 142.Special Focus TableII.1.Technology

56、 adoption in the Philippines is higher in services than manufacturing 29Annexes Tablea4.1.STRI Restrictions on Mode 1 94Tablea4.2.STRI Restrictions on Mode 3 95SERVICES FOR DEVELOPMENTixLIST OF CONTENTSList of Boxes1.Recent Developments and Outlook BoxI.1.understanding slowing growth in china 9Boxa1

57、.Drivers of investment growth in east asian economies 16Boxa2.consumption response to rising house prices,population aging and rising household debt 18Boxa3.Simulated regional impact of continued consumption and residential investment weakness in china 202.Special Focus BoxII.1.aI and jobs 45BoxII.2

58、.Integrated care intervention in Henan,china 49BoxII.3.Innovation facilitators in the eaP region 52BoxII.4.Services for the Pacific 58BoxII.5.Quantifying the potential impact of a fully implemented PSa amendment 63BoxII.6.Global initiatives to optimize cross-border data flows 79Annexes Boxa3.Shaping

59、 tourism development:The impact of digitization and new technology dynamics in eaP 91xiSERVICES FOR DEVELOPMENTPREFACE AND ACKNOWLEDGMENTSPreface and AcknowledgmentsThis report is a collective endeavor and involved several parts of the World Bank including the EAP,EFI and Digital Development.It was

60、prepared by a team led by Ergys Islamaj and Aaditya Mattoo.Other members of the core team were Alessandro Barattieri,Yu Cao,Caroline Gerd G De Roover,Reno Dewina,Sebastian Eckardt,Daisuke Fukuzawa,Young Eun Kim,Duong Trung Le,Veronica Sonia Montalva Talledo,Narya Ou,Jonathan Timmis,and Cecile Wodon.

61、Signifjcant contributions to the fjrst part of the report were made by Danxu cheng,Kevin c.chua,Jun Ge,Samuel christopher Hill,Yusha Li,Rafaela Martinho Henriques,Elitza Mileva,Owen Nie,Nikita Perevalov,Franz Ulrich Ruch,Kersten Kevin Stamm.Agustin Samano Penaloza,Thilasoni Benjamin Musuku;Marius Vi

62、smantas;Shichao Zhou;Ketut Ariadi Kusuma;Viet Quoc Trieu;Tim l.De Vaan;Vidaovanh Phounvixay;Nicolo Fraccaroli;Zafer Mustafaoglu;Michael corlett.The Special focus on“Services for development”benefjted from signifjcant contributions by cristian aedo,Diego ambasz,Nguyet Thi Anh Tran,Nina Arnhold,Andrea

63、 Barone,Tania Priscilla Begazo Gomez,Rong Chen,Ji Eun Choi,Xavier Cirera,Alba Suris Coll Vinent,Tatiana Didier,Michael Drabble,Dominik Englert,Kebede Feda,Jaime Frias,Federico Ganz,Jun Ge,Serene Ho,Hans Ishrat,Magdeleine Joscelyn,Sabreen Khashan,Saloni Khurana,Tatiana Kleineberg,Csilla Lakatos,Blair

64、 Edward Lapres,Dara Lengkong,Neni Lestari,Mariem Malouche,Juan Marchetti,Jessie McComb,Christopher Miller,Graciela Miralles Murciego,Harish Natarajan,The Linh Bao Nguyen,Lauri Pynnonen,Luis Andres Razon Abad,Isabelle Rojon,Rico Salgmann,Arpita Sarkar,Wushuang Shen,Lars M.Sondergaard,Francesco Strobb

65、e,Louise Twining-Ward,Ralph Van Doorn,Gonzalo J.Varela,Jessica Rose Wilson,Noah Yarrow,Juni Tingting Zhu.Manuela V.Ferro provided valuable guidance and helpful comments.We are grateful for stimulating discussions and comments to Ndiame Diop,David Gould,Naoto Kanehira,Lars Moller,Rinku Murgai,Zafer M

66、ustafaoglu,Gaurav Nayyar,Cecile Thioro Niang,Carolyn Turk,Ekaterine T.Vashakmadze,Casey Turgesson,Mahesh Uttanchamdani,Mara Warwick and Lalita M.Moorty;staff of the EAP region who participated in the review meetings on August 3 and August 30,2023,and the EAP Regional Management Team meeting on Augus

67、t 31,2023.We greatly appreciate the support for dissemination provided by Geetanjali Chopra,Mariana Lucia De Lama Odria,Mark Felsenthal,and Kym Louise Smithies.The following staff from the Macroeconomics,Trade and investment Global Practice and the Poverty and Equity Global Practice prepared country

68、-specifjc macroeconomic outlook pages:Dwi endah abriningrum,Vishesh agarwal,Tanida Arayavechkit,Kiatipong Ariyapruchya,Mehwish Ashraf,Mahama Samir Bandaogo,Undral Batmunkh,Nadia Belhaj Hassine Belghith,Andrew Blackman,Yew Keat Chong,Ibrahim Saeed Chowdhury,Kevin C.Chua,Souleymane Coulibaly,andrea co

69、ppola,Kevin Thomas Garcia cruz,Somneuk Davading,Quang Hong Doan,Kim alan edwards,Karen annette Lazaro Enriquez,David M.Gould,Indira Maulani Hapsari,Rashad Hasanov,Faya Hayati,Ahya Ihsan,Assyifa Szami Ilman,Taufjk Indrakesuma,Wendy Karamba,Demet Kaya,Yusha li,Sodeth ly,Dorsati Madani,Kemoh Mansaray,W

70、ael Mansour,Pedro Miguel Gaspar Martins,Elitza Mileva,Jacques Morisset,Thi Da Myint,Darian Naidoo,Shohei Nakamura,Konesawang Nghardsaysone,Hoang The Nguyen,Thu-Ha Thi Nguyen,Ruth Nikijuluw,Samuel Nursamsu,Anthony Obeyesekere,Yus Medina Pakpahan,Utz Johann Pape,Keomanivone Phimmahasay,Ruslan Piontkiv

71、sky,Sharon Faye alariao Piza,Warunthorn Puthong,Ririn Salwa Purnamasari,Rong Qian,Habib Rab,Ratih Dwi Rahmadanti,Thanapat Reungsri,Alief Aulia Rezza,Anna Robinson,Sutirtha Sinha Roy,Jose Luis Diaz Sanchez,Apurva Sanghi,Shakira Binti Teh Sharifuddin,Reshika Singh,Bambang Suharnoko Sjahrir,Lodewijk Sm

72、ets,Katherine Anne Stapleton,Ekaterine T.Vashakmadze,Dung Viet Do,Veronica Sonia Montalva Talledo,Sharad Alan Tandon,Kathleen Victoria Tedi,Sailesh xiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023PREFACE AND ACKNOWLEDGMENTSTiwari,Kimsun Tong,Tuimasi Radravu Ulu,Phonthanat Uruhamanon,Ralph V

73、an Doorn,Matthew Wai-Poi,Ikuko Uochi,Samuel Wills,and Judy Yang.The work was managed by Sebastian Eckardt and Lars Christian Moller for the Macroeconomics,Trade and investment Global Practice,and by Rinku Murgai for the Poverty and Equity Global Practice.Benoit Philippe Marcel Campagne,Alexander Hai

74、der,Monika Anna Matyja,and Kristina Catherine Tan Mercado made contributions to the model,table production,and assisting staff with their forecasts.Yulita Sari Soepardjo and Yu Shang provided technical support.The report was edited and typeset by Circle Graphics,Inc.,Reisterstown,MD.Throughout the r

75、eport,geographic groupings are defjned as follows:Developing East Asia and Pacific comprises cambodia,china,Indonesia,lao Peoples Democratic Republic(PDR),Malaysia,Mongolia,Myanmar,Papua New Guinea,the Philippines,Thailand,Timor-leste,Vietnam,and the Pacifjc Island Countries.The Pacific Island Count

76、ries comprise Fiji,Kiribati,the Marshall Islands,the Federated States of Micronesia,Nauru,Palau,Samoa,the Solomon Islands,Tonga,Tuvalu,and Vanuatu.The ASEAN member countries comprise Brunei Darussalam,Cambodia,Indonesia,Lao PDR,Malaysia,Myanmar,the Philippines,Singapore,Thailand,and Vietnam.The ASEA

77、N-5 comprise Indonesia,Malaysia,the Philippines,Thailand,and Vietnam.The analysis in this report is based on the latest country-level data available as of September 22,2023.SERVICES FOR DEVELOPMENTxiiiLIST OF ABBREVIATIONSList of AbbreviationsAEAdvanced EconomyAIartifjcial IntelligenceAFCasian Finan

78、cial crisisASEANThe Association of Southeast Asian NationsB2BBusiness-to-BusinessB2CBusiness-to-ConsumersCARcapital adequacy RatioCBAcost-Benefjt analysisCOVIDCoronavirus DiseaseCPIConsumer Price IndexDALYsDisability-adjusted life YearsEPUeconomic Policy uncertaintyEFIequitable Growth Finance and In

79、stitutionsEMBIemerging market Bond IndexEMDEemerging Markets and Developing countriesEPUeconomic Policy uncertaintyEUEuropean UnionFDIForeign Direct InvestmentFSOLFinancial Sector omnibus lawGDPGross Domestic ProductGePGlobal economic ProspectsGFcGlobal Financial crisisGHGGreenhouse GasGNIGross Nati

80、onal IncomeGMVGross Merchandise valueGVcGlobal Value chainHIcHigh Income countryICTInformation and communications TechnologyILOInternational labor organization IMFInternational Monetary FundIMOInternational Maritime organizationIPEFIndo-Pacifjc economic FrameworkIPOInitial Public offersIRAInfmation

81、Reduction actlGFVlocal Government Financing VehicleLMIClower Middle Income countryMSMEMicro,Small and Medium enterprise NCDNon-communicable DiseaseNDCNationally Determined contributionsNPLNonperforming loansOECDorganisation for economic co-operation and DevelopmentppPercentage pointPIHPermanent Inco

82、me HypothesisPMIPurchasing Managers indexPPPPurchasing Power ParityPSAPublic Service actP2PPeer-to-PeerRHSRight Hand SideROWRest of the WorldSMESmall and Medium enterpriseSDStandard DeviationSOEState-owned enterpriseSTRIServices Trade Restrictions IndexTFPTotal Factor ProductivityTPPTrans-Pacifjc Pa

83、rtnershipuHcuniversal Health coverageUMICupper Middle Income countryUSMCAUnited States-Mexco-CanadaVATValue added TaxVARVector autoregressionWDIWorld Development IndicatorWEOWorld economic outlookWDRWorld Development ReportWHoWorld Health organizationWTOWorld Trade organizationRegions,World Bank Cla

84、ssification and Country GroupsEAPEast Asia and PacificECAeastern europe and central asiaLACLatin America and the CaribbeanMNAMiddle east and North africaSARSouth AsiaSSASub-Saharan AfricaEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023xivLIST OF ABBREVIATIONSCountry/Economy AbbreviationsCHNChi

85、naFJIFijiFSMFederated States of MicronesiaHKGHong Kong SAR,ChinaIDNIndonesiaJPNJapanKHMCambodiaKIRKiribatiKORRepublic of KoreaLAOlao Peoples Democratic RepublicMNGMongoliaMMRMyanmarMYSMalaysiaNRUNauruPHLPhilippinesPICsPacifjc Island countriesPLWPalauPNGPapua New GuineaRMIRepublic of the Marshall Isl

86、andsSLBSolomon IslandsTHAThailandTLSTimor-LesteTONTongaTUVTuvaluTWNTaiwan,ChinaUKUnited KingdomUSA/USUnited StatesVNMVietnamVUTVanuatuWSMSamoaCurrency UnitsBThai bahtCRCambodian rielDVietnamese dongF$Fiji dollarKMyanmar kyatKPapua New Guinea kinaKipLao kipPPhilippine pesoRMMalaysian ringgitRMBChines

87、e renminbiRpIndonesian rupiahSI$Solomon Islands dollarTogMongolian tugrikUS$Timor-Leste(U.S.dollar)US$United States dollarOverview GrowthMost economies in developing east asia and Pacifjc(eaP),other than several Pacifjc Island countries,have recovered from the succession of shocks since 2020 and are

88、 continuing to grow,albeit at a slower pace(fjgure o1).chinas economy slowed to 0.8percent(q/q)in the second quarter of 2023,after growing by 2.2percent(q/q)in the fjrst quarter.The rest of the region grew at an estimated 1.0percent(q/q)in both the fjrst and the second quarter of 2023.B.GDP relative

89、 to pre-pandemicFigure O1.Most major EAP economies have recovered and are growing,but at a slower paceA.GDP growthSource:Haver Analytics;World Bank.Note:B.Bars show GDP forecast in 2023 relative to 2019 level.eaP:east asia and Pacifjc.859095100105110115120Q4Q1Q220192020202120222023EMDE excluding EAP

90、ChinaEAP excluding ChinaAdvanced EconomiesINDEX:100=2019Q42520151050510152025ChinaVietnamIndonesiaCambodiaKiribatiMalaysiaLao PDRNauruPhilippinesMongoliaPNGTuvaluThailandFijiTimor-LesteVanuatuTongaMarshall Isl.MicronesiaSolomon Isl.SamoaMyanmarPalauPercent Determinantseconomic performance in the reg

91、ion is being shaped by both external and domestic developments(fjgure o2).The key external factors are slowing global growth,still tight fjnancial conditions and trade and industrial policies.among the domestic factors,the most important are the legacy of amplifjed public and private debt and the ma

92、croeconomic policy stance.External factorsThe external environment remains challenging for eaP countries.Global growth is projected to fall to 2.1percent in 2023,from 3.1percent last year(fjgure o3).even though infmation is declining in major economies,core infmation in the US and EU remains elevate

93、d and labor markets remain tight,leading to continued high interest rates.Furthermore,almost 3,000 new restrictions were imposed on global trade in 2022,three times as large as those in 2019.xvSERVICES FOR DEVELOPMENTOVERVIEWTrade and industrialpolicyFinancial conditionsEAP countryeconomicperformanc

94、eMacroeconomic PolicyCOVID legacy:DebtGlobal growthExternal FactorsDomestic Factors Figure O2.External and domestic factors are shaping near-term economic performance in the EAP countriesSource:World Bank staffs illustration.0123456720222023fGDPTradePercentUSEuro AreaPercent0500100015002000250030003

95、5002014201520162017201820192020202120222023Jan-AugInvestmentServicesGoodsNumbers1.00.01.02.03.04.05.06.0Jan-17Sep-17May-18Jan-19Sep-19May-20Jan-21Sep-21May-22Jan-23Sep-23Figure O3.Global growth slowdown,fjnancial tightening and protectionist measures are affecting economic performance in the EAP cou

96、ntriesA.Global GDP and trade growthB.US and EU interest ratesC.New global protectionist measuresSource:Global Trade Alert,Haver Analytics,World Bank.xviEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023OVERVIEWDomestic factorsDebtDebt as a share of GDP increased signifjcantly over the last decad

97、e in most eaP countries.General government debt as a share of GDP has increased signifjcantly in most of the regions economies(fjgure o4).corporate debt too has increased signifjcantly in china and Vietnam by more than 40percentage points of GDP since 2010,and now exceeds the level in advanced econo

98、mies.and household debt is now signifjcantly higher in china,Malaysia and Thailand compared to levels in other emerging markets.ChinaMalaysiaPhilippinesThailandIndonesiaVietnamOtherEMDEsAdvancedeconomies201020232010202320102023Percent of GDPPercent of GDPPercent of GDPChinaVietnamThailandMalaysiaPhi

99、lippinesIndonesia020406080100ThailandMalaysiaChinaVietnamIndonesiaPhilippinesOtherEMDEsAdvancedeconomiesOtherEMDEsAdvancedeconomies020406080100120020406080100120140160180Figure O4.Government and private debt has increased across the regionA.Government debtB.Nonfinancial corporate debtC.Household deb

100、tSource:Institute of International Finance,World Bank staff estimates.High government debt limits fjscal space,constraining public investment,and,by leading to higher interest rates,hurts private investment.High corporate debt also hurts private investment by leaving fjrms with less resources for ne

101、w projects.The cost of servicing high household debt erodes disposable income and hurts consumption.Macroeconomic policyThe macroeconomic policy stance in 2023 is less expansionary than in the 20202022 period in most economies.The major economies in the region are projected to have a lower structura

102、l balance in 2023 than in 2022,except Indonesia which already saw signifjcant fjscal consolidation in 2022(fjgure o5).at the same time,policy rates in the eaP region have been raised starting in late 2022 but remain lower than in other emerging market and developing economies(EMDEs).Authorities appe

103、ar to be balancing the need for monetary policy support and risks of continuing infmation.Rates have recently been reduced in china and Vietnam in response to declining infmation and weaker growth.Tracing the impact of external and domestic factorsExportsForeign demand for manufactured goods and com

104、modities is weakening as global growth slows down.Goods exports have fallen by more than 20percent in Indonesia and Malaysia,and by more than 10percent in china and Vietnam from xviiSERVICES FOR DEVELOPMENTOVERVIEWtheir levels in the second quarter of 2022(fjgure o6).an ongoing revival of tourism ha

105、s helped services exports in the Philippines,Thailand and many Pacifjc Island countries.Trade and industrial policy measures in the eaP countries major trading partners are affecting their exports.as demonstrated in earlier EAP Updates,the tariffs imposed by the US on China since 2018 shifted US imp

106、orts towards other countries in the region.More recently,the Infmation Reduction act(IRa)and the cHIPS and Science act of august 2022,introduced 432101234ThailandPhilippinesMalaysiaChinaIndonesia20202120222023Percent of GDP01234567ChinaIndonesiaMalaysiaPhilippinesThailandVietnamPercentJun-19Nov-19Ap

107、r-20Sep-20Feb-21Jul-21Dec-21May-22Oct-22Mar-23Aug-23Figure O5.Fiscal policy has become less expansionary in most countries,while monetary policy has tightened in the region,except in China and VietnamA.Change in structural balanceB.Policy rateSource:International Monetary Fund,Haver Analytics.ChinaI

108、ndonesiaMalaysiaPhilippinesThailandVietnamPercent2502550Dec-21Feb-22Apr-22Jun-22Aug-22Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23CambodiaMalaysiaIndonesiaPhilippinesThailandVietnamFiji020406080100120140Feb-20Aug-20Feb-21Aug-21Feb-22Aug-22Feb-23Aug-23IndexFigure O6.Goods exports have been declining while to

109、urist arrivals have largely recoveredA.Goods exports(year-on-year growth)B.Tourist arrivals compared to pre-pandemicSource:Haver Analytics.Note:A.three month moving average.B.index to the corresponding month in 2019.xviiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023OVERVIEWdomestic content

110、requirements linked to subsidies granted under the new laws.These Acts were followed by a decline in the exports of the affected products to the US from China and the ASEAN countries,and a slight increase in the exports from Canada and Mexico which are exempted from these requirements(fjgure o7).Con

111、sumptionPrivate consumption,bouncing back from coVID and infmation-induced austerity,had sustained growth in the region but is running out of steam,unexpectedly early in China.In china,the current trend of retail sales is fmatter than the pre-pandemic trends due to both proximate factors(e.g.falling

112、 house prices and increased household debt)and structural factors(e.g.aging)(fjgure o8).consumption growth has fmattened also in the other eaP economies after the post-Delta variant bounce,for reasons similar to those in China:increasing household debt(e.g.in Malaysia,Thailand)and aging populations(

113、e.g.in Malaysia,Thailand,Vietnam).050100150200250Index of 12-months trailing sumASEANChinaUSMCATotalCOVIDTrade TensionsCHIPS&IRAJan-18Jun-18Nov-18Apr-19Sep-19Feb-20Jul-20Dec-20May-21Oct-21Mar-22Aug-22Jan-23Jun-23Figure O7.Electronics and machinery exports of China and ASEAN to the US declined after

114、the introduction of the CHIPS and IRA Acts in August 2022Source:US Census Bureau.Notes:Horizontal running lines(colored)show exports to the US of electronics and machineries(HS code 84 and 85)from China,ASEAN countries,and members of the United States-Mexico-Canada(USMCA)agreement.The dashed line sh

115、ows total exports to the US.The data are smoothed by taking a 12-month trailing sum,and indexed to June 2018.The three vertical black lines correspond to the beginning of the trade tensions,the beginning of COVID-19,and August 2022,when the IRA acts and the CHIPS act were signed.6080100120140160180J

116、an-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23IndexCOVID Alpha waveDelta waveOmicron wave6080100120140160180Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23IndexCOVID Alpha waveDe

117、lta waveOmicron waveFigure O8.Recent trends in retail sales are fmatter than pre-coVID trendsA.ChinaB.East Asia excluding ChinaSource:Haver Analytics.Note:Figure shows seasonally adjusted real retail sales indexed to January-2015.When volume-based retail sales data were not available,value-based ret

118、ail sales were adjusted by the consumer price index.Straight line shows pre-coVID trend and dashed line shows the trend since January 2021.B.fjgure shows unweighted average of aSeaN-5 countries.InvestmentInvestment as a share of GDP has been lower than pre-pandemic levels in developing eaP over the

119、last few years(fjgure o9).Investment growth is affected by export growth,corporate and government debt,and policy uncertainty.All countries in the xixSERVICES FOR DEVELOPMENTOVERVIEW510152025303520152017201920212023MalaysiaThailandChinaIndonesiaPhilippinesVietnamPercent of GDP864202ExportsgrowthUnce

120、rtaintyIndexGovernmentdebt(change in%of GDP)Private Credit(%of GDP)Marginal effect Figure O9.Private investment as a share of GDP has been lower in recent years than pre-pandemic levels in most EAP economies A.Private investmentB.Correlates of private investment growth in emerging markets and develo

121、ping economiesSource:International Monetary Fund,Haver Analytics,World Bank staff estimates.Note:a.chinas data shows fjxed asset investment which includes land purchases etc.B.The bars show marginal effects of each variable in predicting investment growth.coeffjcients are standardized by dividing by

122、 the standard deviation of each variable.Black lines show 90percent confjdence intervals(1.68 x standard errors).See Box a1 for details.eaP region are seeing a slowdown in export growth and most have seen a signifjcant increase in all forms of debt.For example,the share of government debt in GDP has

123、 increased by 10percentage points,on average,since 2019(fjgure o.4).Several countries have also seen high policy uncertainty because of political transitions and instability,as well as international tensions.Chinachinas economic performance today is being shaped by how it has grown in the past and h

124、ow it aims to grow in the future.and what happens in china matters for the whole region;a 1percent reduction in its growth is associated with a reduction in regional growth by 0.3percentage points.chinas past growth,largely driven by investment in infrastructure and property,has left fjrms and local

125、 governments burdened by debt as saturated infrastructure yields diminishing returns and an oversupply of housing reduces property prices.chinas aggregate domestic non-fjnancial debt-to-GDP ratio has more than doubled from 132percent in 2007 to 285percent in 2023.Property accounts for 65percent of t

126、otal household assets,and in July 2023,secondary market home prices in lower-tier cities were more than 20percent below the 2021 peak.The external environment has also become more challenging,with weaker external demand weighing on growth in the short run and geoeconomic tensions constraining access

127、 to critical technologies.China is seeking new drivers of growth based on consumption and innovation that would avoid the problems inherent in the old model of growth,but the transition is proving diffjcult.Some policy choices and changes,have exacerbated uncertainty for consumers and investors(fjgu

128、re o10).loss of confjdence,attributable in part to falling property prices,increased indebtedness,and the implications of aging,has led to a further increase in the already-high savings rate to 33percent.Private fjxed asset investment growth has hovered around zero percent since 2021,weighed down by

129、 high debt,declining operating profjts and persistent uncertainty.The Producer Price Index has declined by an average of 0.4percent per month in January-July 2023,with defmation threatening to increase the real burden of debt and erode corporate profjts.Stronger structural reforms including further

130、liberalization of the Hukou system,stronger social safety nets,greater regulatory predictability for investments in innovative and green products could help revive consumption and investment,creating the basis for inclusive and sustainable growth.xxEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2

131、023OVERVIEW80100120140Jan-20May-20Sep-20Jan-21May-21Sep-21Jan-22May-22Sep-22Jan-23May-23Index(100+=optimistic)COVID Alpha waveDelta wave Omicron wave0.60.40.80.20ConsumergoodsTechhardwareEnergy&materials Internet EducationOthers0.2725*0.3220*0.1839*0.5719*0.7497*0.2436*Figure O10.consumer confjdence

132、 in china has declined and policy uncertainty has hurt investment in specifjc sectors A.Consumer confidence indexB.Impact of a rise in economic policy uncertainty on corporate investmentSource:NBS;Haver Analytics;CSMAR database;World Bank staff estimates.Note:coeffjcient estimates from regressing co

133、rporate investment to asset ratio on a standardized index of economic policy uncertainty(ePu).The ePu index measures the frequency of economic policy uncertainty-related words in media.controls include asset liability ratio,log of total assets,revenue growth,Tobins Q,cash ratio,GDP growth,trade poli

134、cy uncertainty,time and fjrm fjxed effects.Sample included data on 4993 china-listed fjrms for the 2011Q1-2021Q1 period.*P0.01,*P0.05,*P0.1.Growth outlookGrowth in the region remains higher than the growth projected in other EMDEs but is slowing compared to earlier projections.The eaP region is proj

135、ected to grow by 5.0percent in 2023,about 0.1percentage points lower than was expected in april 2023(table o1).Growth in china is projected to be 5.1percent in 2023,faster than 3.0percent in 2022(fjgure o11).However,growth in the rest of the region is projected to slow to 4.6percent in 2023 from 5.8

136、percent TableO1.GDP growth forecast202020212022Oct 2023 forecastApr 2023 forecastfor 2023for 2024for 2023for 2024East Asia&Pacifjc1.37.53.45.04.55.14.8East Asia&Pacifjc(excluding China)3.52.75.84.64.74.94.9Pacifjc Island Countries10.23.56.45.23.64.33.6China2.28.43.05.14.45.14.8Indonesia2.13.75.35.04

137、.94.94.9Malaysia5.53.38.73.94.34.34.2Philippines9.55.77.65.65.85.65.9Thailand6.11.52.63.43.53.63.7Vietnam2.92.68.04.75.56.36.5Cambodia3.13.05.25.56.15.25.7Lao PDR0.52.52.73.74.13.94.2Mongolia4.41.65.05.16.15.26.3Myanmar3.218.03.03.02.03.0(continues)xxiSERVICES FOR DEVELOPMENTOVERVIEWin 2022,and down

138、 from the 4.9percent projected in april 2023.The Pacifjc economies are expected to continue expanding in 2023,with growth projected to be 5.2percent,on average,in 2023.The eaP region is projected to grow by 4.5percent in 2024.While domestic factors are likely to be the dominant infmuence on growth i

139、n china,external factors will have a stronger infmuence on growth in much of the rest of the region.Growth in china is projected to slow to 4.4percent in 2024,as the bounce back from the re-opening of the economy fades and both proximate problems,such as elevated debt and weakness in the property se

140、ctor,as well as longer-term structural factors weigh on growth.Growth in the rest of the region,is expected to edge up to 4.7percent in 2024,as easing global fjnancial conditions and the recovery in the global economy offset the impact of slowing growth in China.Special focus:Services for developmen

141、tlooking ahead to the medium and long term,the development of services will be central to eaPs overall development.east asias rapid economic growth in recent decades is often seen as driven by the manufacturing sector.Yet,services are playing a growing,but often underappreciated role as key drivers

142、of economy-wide growth and job creation.0123456ChinaEAP excl.ChinaEMDE excl.China20232024PercentFigure O11.Growth prospects are higher than in other emerging markets but have weakened since the previous forecastSource:World Bank.Note:Forecast of EMDE excl.China is based on Global Economic Prospects

143、in June.GDP growth forecastTableO1.GDP growth forecast202020212022Oct 2023 forecastApr 2023 forecastfor 2023for 2024for 2023for 2024Papua New Guinea3.20.14.33.05.03.74.4Timor-Leste8.32.93.92.43.53.03.2Palau9.112.12.31.410.412.39.1Fiji17.05.118.67.74.05.04.1Solomon Isl.3.40.64.11.82.72.52.4Tuvalu4.31

144、.80.73.93.54.23.1Marshall Isl.1.81.04.53.03.01.92.1Vanuatu5.00.61.91.52.63.53.6Kiribati1.47.91.22.52.42.52.4Tonga0.52.72.02.62.53.02.9Samoa3.17.15.36.04.05.03.4Micronesia1.83.20.62.82.82.92.8Nauru0.73.42.92.01.51.02.0Source:World Bank;World Bank estimates and projections.Note:Percent growth of GDP a

145、t market prices.Values for 2022 for the small island economies refer to GDP growth estimates.Values for Timor-leste represent non-oil GDP.For the following countries,values correspond to the fjscal year:Federal states of Micronesia,Palau,and Republic of the Marshall Islands(october 1September 30);Na

146、uru,Samoa,and Tonga(July 1June 30).Myanmar growth rates refer to the fjscal year from october to September.(Continued)xxiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023OVERVIEWTo begin with,consider seven facts about services.First,from 2010 to 2021,the share of employment in services increa

147、sed from 35percent to 47percent in china and from 42percent to 49percent in the rest of the eaP countries.Second,productivity in certain services such as business services,fjnance,and communications is higher than in manufacturing,although most service jobs in the region are still in low skill and l

148、ow productivity services,such as traditional retail and transport.However,as Figure O12 shows,in the most recent years,the contribution of the service sector to aggregate labor productivity growth has been higher than the contribution of manufacturing in all major economies in the region.Third,servi

149、ces currently represent the most dynamic elements of international trade and foreign direct investment(FDI)in East Asia.In all countries but Vietnam,the growth of service exports has exceeded the growth of manufacturing exports in the period 20102019,especially in digitally delivered services(fjgure

150、 o13).In most countries,in the period 20122019,the growth of FDI in services has exceeded the growth of FDI in manufacturing by a factor of 5.024681012141618ChinaIndonesiaMalaysia Philippines ThailandVietnamManufacturing exportServices export(excl.travel)Services import(excl.travel)Percent1050510152

151、02530ChinaIndonesiaMalaysia Philippines ThailandVietnamManufacturingServicesPercentFigure O13.Services outpaced Manufacturing in terms of growth of Trade and FDI in recent yearsA.Exports growth(20102019)B.FDI inflow growth(20122019)Source:Haver Analytics,World Development Indicators.Note:B.shows ave

152、rage annual growth of 3-year moving-average FDI values,during 20122019,except for Vietnam(20142019)and Indonesia and Philippines(20132019).Fourth,the importance of services will increase further as consumer demand shifts towards services with incomes rising and populations aging across the region.Fi

153、fth,since services tend to employ more skilled workers than manufacturing or agriculture,the growing share of service sectors will increase the relative demand for skilled workers.Sixth,services tend to be characterized by higher female to male employment ratios,and the ratios grow faster with the l

154、evels of development xxiiiSERVICES FOR DEVELOPMENTOVERVIEW2024681091-9600-0611-1891-9600-0611-1891-9600-0611-1891-9600-0611-1891-9600-0611-1891-9600-0611-18ChinaIndonesiaMalaysia Philippines Thailand VietnamPercentage pointServicesOther industriesManufacturingAgricultureFigure O.12.Services overall

155、are key contributors to aggregate productivity growthSource:GGDC/UNU-WIDER Economic Transformation Database(Kruse et.al.2022).Note:Figure shows sectoral contribution to labor productivity growth,annual average during three different periods.Other industries include mining,utilities,and construction.

156、in services than in manufacturing.lastly,most services except for transport emit signifjcantly lower greenhouse gases for every unit of output generated than industry and agriculture(fjgure o.14).Therefore,structural transformation towards services would support the regions shift to lower carbon gro

157、wth.00.20.40.60.81AgricultureIndustryTransportDistributionHospitalityCommunicationsFinanceBusiness ServicesPublic SectorMisc Services(tCO2e per current tUS$output)Direct EmissionsIndirect EmissionsDirect EmissionsIndirect Emissions(tCO2e per current tUS$output)012345AgricultureIndustryTransportDistr

158、ibutionHospitalityCommunicationsFinanceBusiness ServicesPublic SectorMisc ServicesFigure O14.Services tend to be less carbon-intensive,except for transportA.GHG emission intensity by sectors,ChinaB.GHG emission intensity by sectors,IndonesiaSources:World Bank staff calculations based on the Emission

159、s Database for Global Atmospheric Research(EDGAR;European Commission et al.,2016)and Global Resource Input Output Assessment(GLORIA;Lenzen et al.,2017)databases.Emissions include CO2,CH4 and N2O.Next consider the central argument in this report.Changes in technology and services policy have shaped a

160、nd will infmuence the evolution of services and their contribution to development.Even the uneven diffusion of digital technologies and the limited reform of policies restricting entry and competition in services sectors are leading to structural change across and within sectors.The result,through i

161、ncreased scale,tradability,and innovation,is higher productivity growth in services sectors as well as in the manufacturing sectors that use these services,and increased demand for the sophisticated skills that complement the new technologies.The same combination of services reform and technological

162、 diffusion is also improving education,health and fjnance to equip people to take advantage of these new opportunities.But deeper reform is needed to unleash the virtuous cycle between opportunity and capacity that constitutes development(fjgure o15).The fjrst piece of evidence for the argument abov

163、e is the growing penetration of digital technologies in a range of eaP services sectors and its link with productivity(as illustrated on the left branch of fjgure o15).New fjrm level evidence from the Philippines suggests that the average services fjrm has about a third more data and software assets

164、 per worker than their manufacturing counterpart,though the adoption of digital technologies varies across services sectors(Figure O.16).Digital technology adoption is stronger for fjrms with access to broadband,as well as for foreign-owned fjrms.and,the adoption of digital technologies is associate

165、d with higher productivity and value-added within fjrms.Second,evidence for eaP and other countries confjrms that reducing barriers to competition in services spur higher productivity growth in services sectors as well as in the manufacturing sectors that use these services.For example,new fjrm-leve

166、l analysis for Vietnam reveals that the reduction in restrictions on transport,fjnance and business sectors over the 20082016 period was associated with a 2.9percent annualized increase in value-added per worker in these sectors(fjgure o17).Furthermore,the liberalization in services was associated w

167、ith a 3.1percent increase in labor productivity of the manufacturing enterprises that use services inputs,benefjting small and medium private enterprises most signifjcantly.xxivEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023OVERVIEW C.Impacts of technology adoption on productivity and value-a

168、dded0.00.51.01.52.0Services-AllWholesale&RetailAccomm&FoodServicesTransportProfessionalServicesAdmin&SupportServicesIT ServicesData and Software per WorkerManufacturing-AllData and Software per Worker0.00.51.01.52.0Domestic-OwnedForeign-OwnedNoBroadbandHas FiberBroadband00.511.522.5Total FactorProdu

169、ctivityValue-addedPercentTotal IT Capital per WorkerData and Software Capital per WorkerEcommerce as a Share of Firm SalesFigure O16.Services fjrms use more digital technologies;especially when foreign-owned and with access to broadband;digital technologies are associated with higher levels of produ

170、ctivity A.Usage of digital technologies across services sectorsB.Usage of digital technologies by firm ownership and access to broadband connectivitySource:Philippines Statistical Authority ASPI,CPBI and SICT Databases and World Bank staff analysis.Productivity and jobsAgriculture,manufacturingAcces

171、sEducation,health,financeServices policy reforms and new technologiesEnhanced opportunitiesEnhanced capacitiesCommunication,finance,transport,and other servicesFigure O15.Services for development-the virtuous cycle of opportunity and capacity:an organizing frameworkxxvSERVICES FOR DEVELOPMENTOVERVIE

172、W0.0500.050.10.150.2AllSOEForeignPrivate(small)Private(medium)Private(large)Marginal effect(percent)0.0500.050.10.150.20.25Marginal effect(percent)AllSOEForeignPrivate(small)Private(medium)Private(large)Figure O17.Services liberalization increased fjrms labor productivity in both services and downst

173、ream manufacturing fjrms A.Productivity effects of service reform on services firms(own-effect)B.Productivity effects of services reform on manufacturing firms(downstream effect)Source:World Bank staff estimation based on data from Vietnam enterprise surveys 2008 and 2016.Note:OLS regression results

174、.The dependent variable is the change in log value-added per worker between 2016 and 2008.The main explanatory variable is the change in STRI values in Trade,Transport,Finance,Professionals,and Telecommunication sectors between 2016 and 2008 in Panel a,and the change in the“downstream”STRI for manuf

175、acturing sectors in Panel B.The downstream STRI is a sector-specifjc measure for each 2-digit manufacturing sector,calculated by the average STRI of the above fjve services sectors weighted by the corresponding purchasing value from each manufacturing sectors.The regression sample in panel a consist

176、s of all enterprises operating in Trade,Transport,Finance,Professionals,and Telecommunication sectors,and all manufacturing enterprises in Panel B,in 2008 and 2016.all regressions control for fjrms baseline revenue and employment.Standard errors clustered at the industry level.New jobs created in di

177、gital services may,however,require greater skills than those in traditional services,as indicated by new micro-level evidence from Indonesia.Digital employment represents a larger share in services than in agriculture and manufacturing,and an even higher share in more technical IcT and fjnancial ser

178、vices than in less technical sectors such as distribution and transportation services(fjgure o18).Furthermore close to 40percent of formal digital workers have a university degree or above while less than 20percent of non-digital workers do so,which reveals the relative dominance of the highly educa

179、ted among digital workers.These fjndings imply a likely increase in the demand for skilled workers in the coming years.However,other evidence suggests an important distinction:web-based digital platform jobswhere services like customized software and programming are delivered over the internet tend

180、to require higher levels of education than location-based digital jobse.g.,ride sharing and food deliverywhich are dominated by less-educated workers.Since the promise of higher productivity levels and growth is likely to be more strongly associated with higher skilled jobs,equipping workers with th

181、e relevant skills must be a priority.The use of new digital technologies and reforms in education and health services,could help address the skills defjcit as well as the inequality of access and quality across the region(figure O19),and equip more EAP citizens to engage productively in the new digi

182、tal economy(as illustrated on the right branch of figure O15).The role of policyTo unleash the virtuous cycle between opportunity and capacity,and to ensure that services development is inclusive and sustainable,EAP countries must take three pairs of policy actions.xxviEAST ASIA AND THE PACIFIC ECON

183、OMIC UPDATE OCTOBER 2023OVERVIEW020406080100Nondigital formalNondigital informalDigital formalDigital informalPercentAgricultureWater;SewerageConstructionMining and quarryingAccomodation and FoodManufacturingWholesale and Retail TradeTransportation and storageReal EstateProfessionalHealth and Social

184、 WorkUtilityEducationGovemmentFinancial and InsuranceICT020406080100DigitalformalDigitalinformalNon-digitalformalNon-digitalinformalPercentPrimary or lowerLower secondaryUpper secondaryDiploma I/II/IIIUniversity or higherFigure O18.In Indonesia,digital jobs often require higher level of education an

185、d dominate in more technical service sectorsSource:World bank staff analysis using Indonesias labor Force Surveys 2022.Note:Digital workers are defjned as workers who use digital technologies and internet for work in primary job.A.Share of jobs involving digital technologies,by sectorB.Share of digi

186、tal employment by educational levels Digital booksRemote instructionComputer-assisted learning0.9780.070.680.100.10.20.30.40.50.60.70.80.91Feng et al.(2021)Ma et al.(2023)Feng et al.(2021)Mo et al.(2016)Mo et al.(2013)Lai et al.(2015)Ma et al.(2020b)Li et al.(2023)Mo et al.(2016)Ma et al.(2020a)Bai

187、et al.(2016)Lai et al.(2016)Ma et al.(2020a)Mo et al.(2016)Lai et al.(2016)Li et al.(2023)Lai et al.(2013)Yang et al.(2013)Yang et al.(2013)Lai et al.(2015)Mo et al.(2020)Mo et al.(2014a)Mo et al.(2013)Fafchamps&Mo(2018)Mo et al.(2016)Bianchi et al.(2022)Yang et al.(2013)Lai et al.(2016)Tang et al.(

188、2018)Lai et al.(2015)Fafchamps&Mo(2018)Lai et al.(2015)Clark et al.(2021)Bianchi et al.(2022)Lai et al.(2016)Mo et al.(2015)combinedLee et al.(2023)Lee et al.(2023)Zhang et al.(2016)Bai et al.(2023)Ito et al.(2019)Ito et al.(2019)Li et al.(2023)Effect Size(adjusted)Mo et al.(2020)Ma et al.(2023)Figu

189、re019.Existing studies show that digital technologies improve education outcomes when complemented by education reformSource:Yarrow et.al.,forthcoming.xxviiSERVICES FOR DEVELOPMENTOVERVIEWAccessQualityCostAccessQualityCostFixed broadbandhousehold penetration(%)Median download speed(Mbps)Fixed broadb

190、and basketas%of GNI per cpita Active mobile-broadbandsubscribers per 100 habitatsMedian download speed(Mbps)Mobile broadband basket as%of GNI per capitaChina1131940.5102950.5Vietnam76943.588480.5Thailand582113.5112411.4Mongolia52571.9116151.9Malaysia50962.3125491.0Fiji44154.776223.0Philippines339211

191、.662262.0Indonesia18277.6115240.9Lao PDR12329.056302.7Cambodia102212.1106242.4Myanmar81912.4110231.7Solomon Islands1N/A47.418N/A8.9PNG11613.4112018.8Timore-Leste1632.130N/A4.6PIC-9 average2513.8214.4Fixed BroadbandMobile BroadbandFigure O21.Mobile broadband access has improved in most countries,but

192、mobile does not offer the potential speed of fjxed broadband,access to which remains limited and unequalSource:ITU,TeleGeography,Ookla.Note:PIC-9 includes Kiribati,Marshall Islands,Micronesia,Nauru,Palau,Samoa,Tonga,Tuvalu,and Vanuatu.Data availability is incomplete.The graphs show numerical average

193、 of the available data points for PIC-9.First,countries must pursue both liberalization and regulation.New data for 2022 from the World Bank-WTO Services Trade Restrictions Database reveals that service trade liberalization is still unfjnished business.Figure o20 reports the value for the Services T

194、rade Restrictions Index(STRI)recorded against the level of development(measured as the logarithm of GDP per capita).Despite past reforms,the EAP countries are still characterized by relatively restrictive regimes for services.Advancing the liberalization agenda requires addressing policy restriction

195、s on entry and competition in EAP services markets,ranging from discretionary and opaque licensing to limits on foreign ownership.In parallel,countries need to institute a regulatory framework that addresses old and new market distortions,including the concentration and data misuse that can arise in

196、 markets where digital platforms dominate and for which there is already some evidence in EAP countries.Second,countries must assess how the state needs to complement private enterprise in creating the infrastructure and skills needed to take advantage of the opportunities that are emerging.Over the

197、 last decades,the democratization of access to mobile telephony provided by competing private fjrms seemed to have obviated the need for the fjxed line networks created by plodding public sector monopolies(fjgure o21).But the digital benefjts of access to high-speed broadband have revived the questi

198、on of how the state can ensure adequate access for the poor and remote.Competitively allocated subsidies to private providers may help bridge the gaps,as the experience with universal access funds for basic telecommunications shows.Countries must also wrestle with the question of how far the market

199、and private institutions can be relied on to deliver the skills needed by the digital services economy and what role the state must play in ensuring the appropriate educational scale,composition,quality and access(fjgure o22).xxviiiEAST ASIA AND THE PACIFIC ECONOMIC UPDATE OCTOBER 2023OVERVIEW020406

200、080100789101112GDP per capita(2022;log)Services Trade Restrictiveness Index(2022)CHNIDNMMRMYSPHLTHAVNMFigure O20.Most EAP countries restrict services trade more than other countries at comparable levels of developmentSource:WTO-WB STRI Database and WDI(2022).Note:The average STRI is computed as a si

201、mple average of the indicators for the fjnancial,communication and transport sectors.STRI and level of developmentThird,EAP and other countries must complement unilateral domestic reform with cooperative international action to address services market failures that have a transborder dimension.one e

202、xample is the need to ensure that data fmows that are central to the global services economy are not impeded by the heterogeneity in national regulatory approaches to privacy and cybersecurity(as shown in fjgure o23).another example is the need to ensure that international transport that is central

203、to global trade and tourism does not continue to add CO2 emissions to the atmosphere.In both these cases,countries are beginning to cooperate meaningfully in both regional and multilateral fora.Figure O22.Tertiary enrollment rates have increased in the EAP region but remain low in most countries,wit

204、h the private sector playing a limited roleA.Tertiary enrollment in EAP countries,20012021B.Share of enrollment in private universities Source:ILOSTAT(2022).100806040200CambodiaChinaIndonesiaLao PDRMalaysiaMongoliaMyanmarPhilippinesThailandVietnamTimor-LesteJapanKorea,Rep.Gross enrollment rates(%)20

205、00202120112022 or latest00.10.20.30.40.50.60.70.8CambodiaIndonesiaPhilippinesMongoliaMalaysiaVietnamThailandLao PRDChinaMyanmarFigure O23.cooperation in cross-border data fmows:eaP countries take a heterogeneous regulatory approach to international data transfersSource:World Development Report 2020,

206、updated for SEA-6 countries in June 2023.CambodiaChinaIndonesiaLao PDRMalaysiaMyanmarPhilippinesThailandVietnamSingaporeOpen transferConditional transferLimited transferOutside samplexxixSERVICES FOR DEVELOPMENTOVERVIEWRecent Developments and Outlook1.Recent developments Continued growthThe economie

207、s in most of developing east asia and Pacifjc(eaP),other than several Pacifjc Island countries,have recovered from the succession of shocks since 2020 and are continuing to grow,albeit at a slower pace.chinas economy slowed to 0.8percent(q/q)in the second quarter of 2023,after growing by 2.2percent(

208、q/q)in the fjrst quarter.The rest of the region grew at an estimated 1.0percent(q/q)in the second quarter of 2023,same as in the fjrst quarter,amid weak external demand and moderating private consumption(fjgureI.1).economic activity remained subdued in the Pacifjc Islands as rising prices of imports

209、 have hurt consumers.Figure I.1.Most major eaP economies have recovered and are growing,but at a slower rateA.GDP growth in EAPB.GDP growth in ASEAN-5 economiesSource:Haver analytics;World Bank.859095100105110115120Q4Q1Q220192020202120222023EMDE excluding EAPChinaEAP excluding ChinaAdvanced Economie

210、sINDEX:100=2019Q4859095100105110115120Q4Q1Q220192020202120222023IndonesiaMalaysiaPhilippinesThailandVietnamINDEX:100 =2019Q4While output has surpassed pre-pandemic levels in most of the larger eaP economies,recovery has been uneven across the region.output in china and Vietnam had already exceeded p

211、re-pandemic levels in 2020 and is now about 20percent higher.By the end of 2022,cambodia,Indonesia,lao PDR,Malaysia,Mongolia,the Philippines,and three Pacifjc Island countries(Kiribati,Nauru,and Papua New Guinea)had also exceeded pre-pandemic levels of output.By the end of 2023,Thailand,and three mo

212、re Pacifjc Island countries(Fiji,Tuvalu,and Timor-leste)will have exceeded pre-pandemic levels of output.But output remains below pre-pandemic levels in several Pacifjc Island countries as well as in Myanmar(fjgureI.2).The recovery has also been uneven across sectors.Information and communication te

213、chnology and fjnance have experienced relatively strong growth.Services sector started to recover after economic reopening in several of the regions economies,benefjtting from the release of pent-up demand.However,output in transportation,accommodation and catering sectors in the Philippines and Tha

214、iland,and construction and real estate in Malaysia,Philippines and Thailand is still well below pre-pandemic levels(fjgureI.3).Manufacturing recovered strongly in the aftermath of coVID-19 but has recently slowed down.1SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTlooKPercent2520151050510152025

215、ChinaVietnamIndonesiaCambodiaKiribatiMalaysiaLao PDRNauruPhilippinesMongoliaPNGTuvaluThailandFijiTimor-LesteVanuatuTongaMarshall Isl.MicronesiaSolomon Isl.SamoaMyanmarPalauFigure I.2.output in most major eaP economies is now above pre-pandemic levels,but not in many Pacifjc Island countriesSource:Wo

216、rld Bank staff calculations.607080901001101201301402020202120222023Q12023Q22020202120222023Q12023Q22020202120222023Q12023Q22020202120222023Q12023Q22020202120222023Q12023Q22020202120222023Q12023Q2ChinaIndonesiaMalaysiaPhilippinesThailandVietnamAgricultureManufacturingWholesale&retail tradeTransport,a

217、ccommodation&cateringICT&financeReal estate&constructionINDEXFigure I.3.IcT and fjnance are growing rapidly,other services are recovering,manufacturing is slowing downSource:Haver analytics.after a relatively modest performance in 2022,chinas pace of poverty reduction is expected to pick up in 2023

218、following higher growth this year(fjgureI.4).In the rest of the region,the rate of poverty reduction has been moderate in 2022 and is expected to continue this way over the next years.overall,7 million people in the region are expected to escape poverty between 2022 and 2023 at the lower-middle inco

219、me poverty line(uS$3.65/day,2017 PPP),whereas 37 million people are projected to escape poverty at the upper-middle income poverty line(uS6.85/day,2017 PPP).2.DeterminantsIn most major eaP economies,private consumption,bouncing back from coVID and infmation-induced austerity,sustained growth in the

220、fjrst half of 2023,but is running out of steam,unexpectedly early in china.Meanwhile,exports of both manufactured goods and commodities have contracted(fjgureI.5).Public investment and private investment also remain low in much of the region.Fiscal policy is now less expansionary in most countries.2

221、023 GDP(forecast)compared to 2019Growth of sectoral output(2019Q4=100)2EAST ASIA AND THE PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooK4228282419151101081101019487020406080100120201920202021202220232024ChinaEAP excluding ChinaMillions of peopleChinaEAP excluding China34834829527

222、8249224308314320315307300201920202021202220232024Millions of people200250300350Figure I.4.The number of poor in developing eaP countries is expected to decline in 2023A.Lower middle-income class poverty line($3.65 per day in 2017PPP)B.Upper middle-income class poverty line($6.85 per day in 2017PPP)S

223、ource:World Bank staffs estimation.Poverty estimates are based on growth forecasts,population projections,and historical growth elasticities of poverty.Note:Forecasts are based on GDP growth projections as of September 21,2023.Source:Haver analytics.Note:chinas private consumption includes governmen

224、t consumption.Decomposition of goods export is estimated from trade statistics.20100102030Q1 Q22020202120222023Q1 Q22020202120222023Q1 Q22020202120222023Q1 Q22020202120222023Q1 Q22020202120222023ChinaIndonesiaMalaysiaPhilippinesThailandPrivate consumptionGovernment consumptionPublic and private inve

225、stmentCommodity exportsManufacturing exportsNet export(for China)Services exportsImportPercentage pointFigure I.5.Private consumption and services exports have sustained growth,amidst weak private investment and goods exportsContribution to growth3SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTl

226、ooKeconomic performance in the region is being shaped by external and domestic developments(fjgureI.6).The key external factors are slowing global growth,still tight fjnancial conditions and an increase in trade protection combined with industrial policies.among the domestic factors,the most importa

227、nt are the coVID legacy of amplifjed public and private debt and the policy stance,especially fjscal and monetary.Trade and industrialpolicyFinancial conditionsEAP countryeconomicperformanceMacroeconomic PolicyCOVID legacy:DebtGlobal growthExternal FactorsDomestic Factors Figure I.6.external and dom

228、estic factors are shaping economic performance in the eaP countriesSource:World Bank staffs illustration.0123456720222023fGDPTradePercent05001000150020002500300035002014201520162017201820192020202120222023Jan-AugInvestmentServicesGoodsNumbersUSEuro AreaPercent1.00.01.02.03.04.05.06.0Jan-17Sep-17May-

229、18Jan-19Sep-19May-20Jan-21Sep-21May-22Jan-23Sep-23Figure I.7.Global growth slowdown,fjnancial tightening and protectionist measures are shaping economic performance in the eaP countriesA.Global GDP and trade growthB.US and EU interest ratesC.New global protectionist measuresSource:Global Trade alert

230、,Haver analytics,World Bank.External factorsGlobal growth is projected to fall this year to 2.1percent,from 3.1percent last year(fjgureI.7).even though infmation shows signs of declining in major economies,core infmation in the uS and eu remains elevated and labor markets remain tight,leading to con

231、tinued high interest rates in the uS and eu.Furthermore,almost 3,000 new restrictions were imposed on global trade in 2022,three times as large as those in 2019.4EAST ASIA AND THE PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooKa growth shock originating in the regions largest tra

232、ding partners,china and the uS,would impact eaP economies through bilateral trade and fjnancial fmows,including foreign direct investment(FDI)(as discussed at length in World Bank 2023a).changes in growth in the uS or china could also impact regional economies by affecting confjdence and hence domes

233、tic consumption and investment.an unexpected one-off decline in uS(chinas)GDP growth rate of 1percentage point would decrease growth rate in the other developing eaP countries,on average,by an estimated 0.5(0.3)percentage points in the next year(fjgureI.8).unanticipated shocks to uS monetary policy

234、also affect growth;a 25 basis points increase lowers growth by an estimated 0.5percentage points.Domestic factorsGeneral government debt as a share of GDP has increased signifjcantly in most of the regions economies(fjgureI.9).High government debt limits fjscal space constraining public investment.H

235、igh public debt can also hurt private investment if it leads to higher interest rates,making it more expensive for businesses to borrow money.Rapid increases in debt can also rise uncertainty about the future and make businesses hesitant to invest in new projects.a 10percentage points increase in ge

236、neral government debt to GDP is associated with a 1.2percentage point decline in investment growth(Box a1).C.Household debtChinaMalaysiaPhilippinesThailandIndonesiaVietnamOtherEMDEsAdvancedeconomies201020232010202320102023Percent of GDPPercent of GDPPercent of GDPChinaVietnamThailandMalaysiaPhilippi

237、nesIndonesia020406080100ThailandMalaysiaChinaVietnamIndonesiaPhilippinesOtherEMDEsAdvancedeconomiesOtherEMDEsAdvancedeconomies020406080100120020406080100120140160180Figure I.9.Government debt has increased across the region and corporate and household debt remains high in some countriesA.Government

238、debtB.Nonfinancial corporate debtSource:Institute of International Finance,World Bank staff estimates.corporate debt has increased in the regions economies,quite rapidly in china,Thailand and Vietnam.Higher corporate can hurt private investment growth as fjrms are left with less money available to i

239、nvest in new projects or expand its existing business.Nonfjnancial corporate debt is signifjcantly higher than in other emerging markets in china,Malaysia,Thailand and Vietnam.a 10percentage points increase in private debt to GDP is associated with a 1.1percentage point decline in investment growth.

240、1.20.80.40.0US GDPChina GDPUS monetary policyPercentage pointFigure I.8.Growth in the region is infmuenced by growth in the regions largest trading partners and monetary tightening in the uSSource:World Bank staffs estimations.Notes:Bar show impact of the following shocks:one percentage point decrea

241、se in china and uS growth,and 25 bps increase in uS 2-year interest rate yield.effects estimated using a structural Bayesian VaR model that includes the following variables:uS monetary policy reaction shock,u.S real GDP growth,china real GDP growth,commodity weighted prices for recipient country,rec

242、ipient country real GDP growth,and recipient country exchange rate to the uS dollar.eaP countries included in the estimation are Indonesia,Malaysia,the Philippines,and Thailand.The models are estimated from 2000Q1 to 2022Q4,except in Malaysia which starts in 2005Q1.The uS monetary policy shock is ba

243、sed on arteta et al.(2022)and captures changes in investors assessments that the Federal Reserves reaction function has become more hawkish.Impact of 1 pp decrease in China and US GDP growth,and 25 bps increase in US 2-year yield 5SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTlooKHousehold debt

244、 is relatively high in china,Malaysia and Thailand compared to other emerging markets.Similarly,high household debt can have a negative impact on consumption.When households have high levels of debt,a signifjcant portion of their income goes towards paying off debt obligations,resulting in less disp

245、osable income and less consumption.High levels of debt can also lead to increased fjnancial stress,which can cause households to cut back on spending in order to reduce their debt burden.Households with high debt may also fjnd it more diffjcult to access credit to fjnance purchases of big-ticket ite

246、ms.a 10-percentage point increase in household debt would decrease consumption growth by 0.4percentage point(Box a2).Macroeconomic policyas the coVID-19 situation stabilized and economic activity resumed,governments in the region have reduced their expenditure on support programs that were implement

247、ed during the pandemic.However,this decrease in support is leading to a decline in disposable income for households and fjrms,which could potentially dampen consumption and investment.Most major economies in the region are estimated to have a lower structural balance in 2023 compared to the previous

248、 year(fjgureI.10).Policy interest rates have been raised both globally and in the eaP region to address the threat of infmation.Policy rates in the eaP region,however,remained lower than in other emerging market and developing economies(eMDes),and the rise in policy rates has been milder.This is bec

249、ause that the eaP region has generally been less affected by infmationary pressures than other regions.Nonetheless,policymakers in the eaP region are still keeping a close eye on infmation.For example,central banks in the region have been implementing various measures to manage infmation,such as tig

250、htening monetary policy and adjusting interest rates.Due to weak growth,rates have recently been decreased in china and Vietnam(fjgureI.11).Monetary policy in the region appears to be balancing the need for monetary policy support and risks of continuing infmation.Tracing the impact of external and

251、domestic factorsExportsGoods exports have fallen by more than 20percent from their peak in the second quarter of 2022 in Indonesia and Malaysia,and by more than 10percent in china and Vietnam(fjgureI.12).an ongoing revival of tourism has helped services exports in the Philippines,Thailand and many P

252、acifjc Island countries.But contribution of tourism activity to economic growth is expected to plateau as tourist arrivals reaches pre-pandemic in most eaP economies.432101234ThailandPhilippinesMalaysiaChinaIndonesia20202120222023Percent of GDPFigure I.10.Fiscal policy in 2023 is less expansionary t

253、han in the 2020-2022 period in most countriesSource:World economic outlook Database,april 2023.Change in structural balance6EAST ASIA AND THE PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooK01234567ChinaIndonesiaMalaysiaPhilippinesThailandVietnamPercentJun-19Nov-19Apr-20Sep-20Feb-

254、21Jul-21Dec-21May-22Oct-22Mar-23Aug-230510152025May-21Aug-21Nov-21Feb-22May-22Aug-22Nov-22Feb-23May-23Aug-23ChinaIndonesiaMalaysiaPhilippinesThailandCambodiaPercentFigure I.11.Monetary policy has tightened in the region,except in china and VietnamA.Policy rateB.Broad money growthSource:Haver analyti

255、cs.ChinaIndonesiaMalaysiaPhilippinesThailandVietnamPercent2502550Dec-21Feb-22Apr-22Jun-22Aug-22Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23020406080100120140Feb-20Aug-20Feb-21Aug-21Feb-22Aug-22Feb-23Aug-23IndexCambodiaMalaysiaPhilippinesThailandVietnamFijiIndonesiaFigure I.12.Goods exports have been declini

256、ng while tourist arrivals have largely recoveredA.Goods exports(year-on-year growth)B.Tourist arrivals compared to pre-pandemicSource:Haver analytics.Note:a.three month moving average.B.index to the corresponding month in 2019.one reason for the decline in exports is weakening foreign demand for man

257、ufactured goods and commodities in eaP countries as global growth slows down.as we saw above(fjgure 7a),global GDP growth in 2023 is projected to be 1 percentage point lower than in 2022,while global goods trade growth is projected to be about 4 percentage points lower than in 2022.Furthermore,as we

258、 saw in Figure 8,slowing growth in the regions largest trading partners,china and the uS,has a signifjcant negative effect on growth in the rest of the eaP region,with trade likely to be an important transmission mechanism.7SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTlooKa second reason is th

259、e impact on exports of trade and industrial policy measures in eaP countries major trading partners.as demonstrated in earlier eaP updates,the tariffs imposed by the uS on china since 2018 shifted uS imports towards other countries in the region.More recently,the Infmation Reduction act(IRa)and the

260、cHIPS and Science act of august 2022,introduced domestic content requirements linked to subsidies granted under the new laws.These acts were followed by a decline in the exports of the affected products to the uS from china and the aSeaN countries,and a slight increase in the exports from canada and

261、 Mexico which are exempted from these requirements(Figure 13).ConsumptionHousehold spending remains below pre-pandemic trends in the eaP region(fjgureI.14).In china,the current trend of retail sales is fmatter than the pre-pandemic trend due to both proximate factors(e.g.falling house prices and inc

262、reased household debt)and structural factors(e.g.aging)(BoxI.1).consumption growth has fmattened also in the other eaP economies after the post-Delta variant bounce.The reasons are likely to be similar to those in china:the increase in household debt(e.g.in Malaysia,Thailand)and population aging(e.g

263、.in Malaysia,Thailand,Vietnam).High levels of indebtedness have been shown to dampen consumption of both the poor and rich(Box a2).Trade TensionsCOVIDCHIPS&IRA050100150200250Jan-18Jun-18Nov-18Apr-19Sep-19Feb-20Jul-20Dec-20May-21Oct-21Mar-22Aug-22Jan-23Jun-23Index of 12-months trailing sumASEANChinaU

264、SMCATotalFigure I.13.electronics and machinery exports of china and aSeaN to the uS declined after the introduction of the cHIPS and IRa acts in august 2022Source:uS census Bureau.Notes:Horizontal running lines(colored)show exports to the uS of electronics and machineries(HS code 84 and 85)from chin

265、a,aSeaN countries,and members of the united States-Mexico-canada(uSMca)agreement.The dashed line shows total exports to the uS.The data are smoothed by taking a 12-month trailing sum,and indexed to June 2018.The three vertical black lines correspond to the beginning of the trade tensions,the beginni

266、ng of coVID-19,and august 2022,when the IRa acts and the cHIPS act were signed.6080100120140160180Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19Jul-19Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23IndexCOVID Alpha waveDelta waveOmicron wave6080100120140160180Jan-15Jul-15Jan-16Jul-16Jan-17Ju

267、l-17Jan-18Jul-18Jan-19Jul-19Jan-20Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23IndexCOVID Alpha waveDelta waveOmicron waveFigure I.14.Recent retail sales data suggest divergence from pre-coVID trendsA.ChinaB.East Asia excluding ChinaSource:Haver analytics.Note:Figure shows seasonally adjusted real reta

268、il sales indexed to January-2015.When volume-based retail sales data were not available,value-based retail sales were adjusted by the consumer price index.Straight line shows pre-coVID trend and dashed line shows the trend since January 2021.B.fjgure shows unweighted average of aSeaN-5 countries.8EA

269、ST ASIA AND THE PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooKIndex(100+=optimistic)80100120140Jan-20May-20Sep-20Jan-21May-21Sep-21Jan-22May-22Sep-22Jan-23May-23COVID Alpha waveDelta waveOmicron wave2017201820192020202120222023H1Wage and salaryBusiness incomePropertyGov.transfer

270、s0246810Percent Figure BI.1.1.consumer confjdence indexFigure BI.1.2.contributions to growth in disposable income(percentage points y/y)Source:NBS.1 In the past,a low labor income share also contributed to depressed consumption,but the ratio has increased in recent years.(continued)BoxI.1.Understand

271、ing slowing growth in ChinaGrowth in china is projected to be 5.1 percent in 2023,faster than the 3.0 percent in 2022.But growth has slowed since april,due to subdued domestic demand and persistent diffjculties in the real estate sector.consumer confjdence has been affected by concerns over jobs,inc

272、ome,and falling property prices(fjgure BI.1.1).Real estate investment continues to contract,while declining profjts and uncertainty have dampened investment in other sectors.Meanwhile,slowing global growth and geo-economic tensions,which have affected global value chains in some sectors,have weakene

273、d external demand for chinas exports and limited access to key technologies.long-term factors have also played a roledemographic trends and limitations to chinas social safety net are weighing on consumption and high corporate leverage on investment.consumption has been affected by weaker household

274、income growth,the negative wealth effect from the property market slump and increased precautionary savings.Despite an improvement over 2022,growth in average household income remains below the pre-pandemic trend(fjgure BI.1.2).In addition,property is estimated to account for 65 percent of total hou

275、sehold assets(IMF 2020).Falling property prices-secondary market home prices in lower-tier cities were more than 20 percent below the 2021 peak in July-have weighed on consumer spending.Finally,consumption has also been held back by increased precautionary savings.1 chinas household savings ratealre

276、ady exceptionally high before coVID-19-increased further to 33 percent of disposable income refmecting heightened uncertainty and mobility restrictions during coVID-19 as well as limitations of chinas social safety net which induces high levels of precautionary savings.Turning to investment,it has r

277、emained stagnant mainly because of the severe property sector downturn but also due to policy uncertainty.Real estate investment has contracted by 28 percent since July 2021,owing to weak housing demand and debt distress among property developers(fjgure BI.1.3).Investment in upstream sectors,e.g.con

278、struction materials,has also been declining.Furthermore,there is some global evidence that policy uncertainty 9SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTlooK(Box I.1.continued)Figure BI.1.3.Fixed asset investment growth by sectorFigure BI.1.4.Impact of economic policy uncertainty on fjrm in

279、vestment40302010010203040Jul-20Jan-21Jul-21Jan-22Jul-22Jan-23Jul-23ManufacturingReal estateInfrastructure0.60.40.80.20ConsumergoodsTechhardwareEnergy&materials Internet EducationOthers0.2725*0.3220*0.1839*0.5719*0.7497*0.2436*Source:NBS,World Bank staff estimates.Note:B2.4.coeffjcients from a time a

280、nd fjrm fjxed effects regression of fjrm investment to asset ratio on a standardized index of economic policy uncertainty(ePu),using data for 4993 china-listed fjrms in 2011Q1-2021Q1.The ePu index measures the frequency of economic policy uncertainty-related words in media.2 control variables includ

281、e the asset liability ratio,log of total assets,revenue growth,Tobins Q,cash ratio,GDP growth,and trade policy uncertainty.*P0.01,*P0.05,*P0.1.2 Retrieved from https:/ Bloom,Steven J.Davis,and Xiaoxi Wang,2013.“economic Policy uncertainty in china,”unpublished paper,university of chicagoand Baker,Sc

282、ott,Nicholas Bloom and Steven J.Davis,“Measuring economic Policy uncertainty,”Quarterly Journal of economics,November 2016,Vol 131,Issue 4 have developed widely-used news-based indexes of economic policy uncertainty.has contributed to lower investment.Recent advances in measuring policy uncertainty

283、facilitate empirical analysis of its impact(Baker et al.,2016).There is evidence to suggest that elevated policy uncertainty in china is associated with reduced fjrm-level investment(fjgure B1.4).These results are consistent with analytical fjndings that even moderate amounts of policy uncertainty c

284、an have a large negative impact on investment(Rodrik 1991).In particular,previous research has found that uncertainty stemming from macroeconomic shocks can lead to fjrms pausing investment and hiring,translating to rapid drops in output and employment in the short term(Bloom 2009).The external envi

285、ronment has also become less favorable,further weighing on growth.after three years of strong exports of goods during the pandemic,the demand for chinas exports has declined in 2023 due to slower global growth amid tighter fjnancial conditions.Beyond the short term,chinas export sector faces headwin

286、ds from geo-economic tensions and the fragmentation of global value chains.The authorities have responded to the worsening economic conditions by easing macroeconomic policies and signaling further support to bolster consumption and improve the business environment.Key monetary policy rates have bee

287、n lowered,but elevated interest rates in other major economies and the risk of capital outfmows constrain the room for monetary easing.on the fjscal front,support has traditionally consisted of tax relief and infrastructure investment,but fjscal policy is facing challenges.Funding pressures for loca

288、l governments,due to the sharp decline in land sales,and a limited pipeline of feasible infrastructure projects have constrained spending.local government fjnancing vehicles(lGFVs),which supported growth during the pandemic,are also facing funding constraints.over 70 percent of bonds issued by lGFVs

289、 so far in 2023 have been used to repay debt.However,with a debt-to-GDP ratio of 21 percent,the central government has space to step in and help fjnance the necessary increase in fjscal spending,as was done in 2020 when the central government issued a special coVID bond and transferred the funds dir

290、ectly to cash-strapped city and county governments.10EAST ASIA AND THE PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooKInvestmentInvestment as a share of GDP has been lower than pre-pandemic levels in developing eaP over the last few years(fjgureI.15).Investment growth has been cl

291、osely associated with export growth fmuctuations in the eaP,as well as increased policy uncertainty and rising levels of corporate and government debt(Box a3).Policy uncertainty was high in Malaysia and Thailand amidst political uncertainty but has come down recently.Public investment generally supp

292、orted growth in the region,but it has plateaued recently as governments debt burden has increased.510152025303520152017201920212023MalaysiaThailandChinaIndonesiaPhilippinesVietnamPercent of GDP2015201720192021202310152025024681012MalaysiaThailandIndonesiaPhilippinesVietnamChina(rhs)Percent of GDPFig

293、ure I.15.Public investment has supported growth,whereas private investment as a share of GDP is lower than pre-pandemic levels in most EAP economiesA.Private investmentB.Public investmentSource:International Monetary Fund,Haver analytics,World Bank staff estimates.Note:chinas data shows fjxed asset

294、investment which includes land purchases etc.chinas public investment can include Soe investment.InflationInfmation had been declining across the eaP region,in response to lower commodity prices,easing supply constraints and decelerating domestic demand(fjgureI.16).However,infmation ticked up in aug

295、ust as energy prices increased slightly and fed into higher transport costs,and food costs increased in some countries(Indonesia and Philippines).Infmation has remained stubbornly high across the Pacifjc,with an average of over 6.7percent in 2022,a signifjcant increase from the 1.5percent average du

296、ring 20192021.3.Outlook and risksGrowth in the region is slowing compared to earlier projections but remains higher than the growth projected in other eMDes.The eaP region is projected to grow by 5.0percent in 2023,about 0.1percentage points lower than was expected in april 2023(tableI.1).Growth in

297、china is projected to be 5.1percent in 2023,faster than the 3.0percent in 2022.However,growth in the rest of the region is projected to slow to 4.6percent in 2023 from 5.8percent in 2022,and down from the 4.9percent projected in april 2023.The Pacifjc economies are expected to continue expanding in

298、2023,with growth projected to be 5.2percent,on average,in 2023.Fiji has been leading the post-coVID-19 recovery in the Pacifjc region and is expected to reach its pre-pandemic output level in 2023.11SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTlooK20246810Dec-21Apr-22Aug-22Dec-22Apr-23Aug-23Ch

299、inaIndonesiaMalaysiaPhillipinesThailandVietnamPercent10505101520CPICore CPIPPIExport PriceImport PricePercentJan-21Jul-21Jan-22Jul-22Jan-23Jul-23Figure I.16.cPI infmation is declining;PPI shows defmationary pressuresA.Consumer Price Index inflationB.Various indicators of inflationSource:Haver analyt

300、ics.Note:B.fjgure shows unweighted average of china and aSeaN-5 countries.TableI.1.GDP growth forecast202020212022Oct 2023 forecastApr 2023 forecastfor 2023for 2024for 2023for 2024East Asia&Pacifjc1.37.53.45.04.55.14.8East Asia&Pacifjc(excluding China)3.52.75.84.64.74.94.9Pacifjc Island Countries10.

301、23.56.45.23.64.33.6China2.28.43.05.14.45.14.8Indonesia2.13.75.35.04.94.94.9Malaysia5.53.38.73.94.34.34.2Philippines9.55.77.65.65.85.65.9Thailand6.11.52.63.43.53.63.7Vietnam2.92.68.04.75.56.36.5Cambodia3.13.05.25.56.15.25.7Lao PDR0.52.52.73.74.13.94.2Mongolia4.41.65.05.16.15.26.3Myanmar3.218.03.03.02

302、.03.0Papua New Guinea3.20.14.33.05.03.74.4Timor-Leste8.32.93.92.43.53.03.2Palau9.112.12.31.410.412.39.1Fiji17.05.118.67.74.05.04.1Solomon Isl.3.40.64.11.82.72.52.4Tuvalu4.31.80.73.93.54.23.1Marshall Isl.1.81.04.53.03.01.92.1Vanuatu5.00.61.91.52.63.53.6Kiribati1.47.91.22.52.42.52.4Tonga0.52.72.02.62.

303、53.02.9Samoa3.17.15.36.04.05.03.4Micronesia1.83.20.62.82.82.92.8Nauru0.73.42.92.01.51.02.0Source:World Bank;World Bank estimates and projections.Note:Percent growth of GDP at market prices.Values for 2022 for the small island economies refer to GDP growth estimates.Values for Timor-leste represent n

304、on-oil GDP.For the following countries,values correspond to the fjscal year:Federal states of Micronesia,Palau,and Republic of the Marshall Islands(october 1September 30);Nauru,Samoa,and Tonga(July 1June 30).Myanmar growth rates refer to the fjscal year from october to September.12EAST ASIA AND THE

305、PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooKThe eaP region is projected to grow by 4.5percent in 2024.While domestic factors are likely to be the dominant infmuence on growth in china,external factors will have a stronger infmuence on growth in much of the rest of the region.G

306、rowth in china is projected to slow to 4.4percent in 2024,as the bounce back from the re-opening of the economy fades and both proximate problems,such as elevated debt and weakness in the property sector,as well as longer-term structural factors weigh on growth.Growth in the rest of the region,which

307、 had suffered in 2023 from slowing global growth and tightening fjnancial conditions,is expected to edge up to 4.7percent in 2024.The likely recovery of global growth(from 2.1percent in 2023 to 2.4percent in 2024)and the expected easing of global fjnancial conditions are expected to offset the impac

308、t of china slowing down.The growth rate in the Pacifjc Island countries is expected to moderate to 3.6percent in 2024,as the initial post-coVID-19 rebound dissipates and the region moves towards its estimated long-term trend growth of 2.6percent.Growth in the eaP region as a whole is projected to be

309、 higher than that of other eMDes in 2023 and 2024.Despite declining infmation and lower industrial country interest rates,monetary policy in the region will continue to be constrained by domestic infmationary fears and historically high foreign interest rates.Therefore,borrowing costs are likely rem

310、ain high,constraining room for spending and raising the risk of debt distress in some countries.Furthermore,high indebtedness,combined with rising costs of servicing debt,will weigh on private investment.The baseline projection for the region is subject to several downside risks,including the global

311、 economy slowing down and tighter-than-expected global fjnancial conditions.an intensifjcation of geopolitical tensions presents a further downside risk,as do natural disasters,including extreme weather events related to climate change,especially for the small Pacifjc Island economies.The outlook fo

312、r consumption in china is also subject to downside risks.Further loss of consumer confjdence could hold back consumer spending and weigh on growth.chinas property sector is also subject to downside risks.While the authorities have provided liquidity support to property developers,house prices contin

313、ue to fall in many cities.Mongolia,the Solomon Islands,lao PDR,and Myanmar are especially exposed to china as a destination for exports of construction materials,and as a source of FDI(Box a3).Increased fjnancial stress in some advanced economies in early 2023,following the failures of certain indus

314、trial country banks,raised concerns about potential spillovers to eMDes,including those in the(eaP)region.While risk aversion increased,causing credit default swap premia to rise in some eMDes,those concerns have large dissipated,and the eaP banking sector has not so far been impacted.But risks rema

315、in,amidst recent downgrades of fjnancial institutions in the uS.a credit crunch in advanced economies,even if contained,would result in negative spillover in other eMDes,including in the eaP region.4.Macro financial policiesIncreased government spending in the last decade was not matched by higher r

316、evenues.Government spending as a share of GDP in eaP countries has,on average,been increasing since the asian Financial crisis(aFc)and has continued after the Global Financial crisis(GFc)(World Bank 2023).The increase in government spending above and beyond revenues,especially to cope with recent sh

317、ocks,has led to an increased debt burden in all major economies and especially in Fiji,Palau,and Timor-leste.The interest payment burden has been increasing across the region as interest rates rise and is signifjcant in Indonesia,lao PDR,Papua New Guinea,and Mongolia.General government gross debt is

318、 signifjcant in Mongolia and Fiji,while short term debt to GDP ratio is high in Malaysia and Thailand.13SERVICES FOR DEVELOPMENTReceNT DeVeloPMeNTS aND ouTlooKThe higher debt combined with increased costs of borrowing have shrunk fjscal space,curtailing the ability of eaP countries to spend money on

319、 important programs or respond to unexpected economic events.The recent decline in commodity price pressures offers some breathing room for countries to move away from wasteful subsidies and start boosting their fjscal space.Governments can commit to fjscal reform through the enactment of legislatio

320、n,especially to boost tax mitting to restoring fjscal discipline through the(re)introduction of fjscal rules could lower borrowing spreads in the event of future economic shocks(World Bank 2023).Tighter monetary policies in global markets have led to higher funding costs for corporate borrowers,whic

321、h can increase their vulnerabilities.Moreover,higher interest rates can worsen the existing vulnerabilities caused by high household indebtedness in certain countries,such as Malaysia and Thailand.While banks appear to be capable of handling fjnancial diffjculties faced by both corporations and hous

322、eholds,they must remain vigilant to potential threats to their safety and soundness(tableI.2).Credit ExpansionCapital AdequacyAsset QualityProfitabilitySolvencyLiquidityDomesticcredit toprivatesector(%of GDP)RegulatoryCapital toRisk-WeightedAssets(%)NPLs toTotal GrossLoans(%)Return onequity(%)Deposi

323、t toloan ratio(%)Liquidasset(%short-termliability)2022change2023change2023change2023change2023change2023changeChina22014151207.031154625Indonesia4122312014.841086240Malaysia12981902010.6112271514Philippines4911503112.7314015446Thailand17521190308.61911341Vietnam123151102014.939421211Cambodia18268220

324、316.708013187Lao PDR54121932112.91180357Mongolia4369110.3912514343Myanmar3.0019828642FinancialTable I.2.Financial sector is well-capitalized except for Vietnam,but risks remain to profjtability,solvency,and liquiditySource:IMF,Fitch Solutions,World Bank,Haver analytics,national sources.Note:latest q

325、uarterly fjgures.color scale represents country quintiles relative to the group of emerging markets and developing economies,with red denoting the worst exposure and green the least.change denotes percentage change compared to 20172021 average.credit is growing in most countries in the region driven

326、 by factors such as the removal of pandemic-related restrictions.While this is a positive symptom of economic recovery,rapid lending growth and overexposures to the real estate sector such as in Vietnam raise concerns.The phasing out of forbearance measures put in place during the pandemic has revea

327、led vulnerabilities in the fjnancial sectors of Vietnam and cambodia,triggering the re-introduction of measures in Vietnam during april 2023.Similarly,their continuation in lao PDR and china is likely to lead to an underestimation of the true levels of non-performing loans(NPls).even in countries th

328、at have phased out such measures,a clear plan for dealing with deferred payments and restructured loans is often missing.Idiosyncratic risks persist in the banking sector,especially for entities exposed to the real estate sector.While non-performing loans(NPls)in most eaP countries have been relativ

329、ely stable,there is a risk of overestimated asset quality and understatement of the vulnerabilities accumulating in some of east asias bank-dominated fjnancial systems.a correction on this front will constrain the banking sectors balance sheet headroom and impact credit growth.Banks in Vietnam and l

330、ao PDR present modest capital buffers relative to regulatory requirements.In lao PDR,the largest state-14EAST ASIA AND THE PACIFIC ECONOMIC UPDATE ocToBeR 2023ReceNT DeVeloPMeNTS aND ouTlooKowned bank(with 34percent of banking system assets)had its capital adequacy ratio steadily decline to levels b

331、elow the prudential minimum of eight percent as of end 2022,putting at risk the entire fjnancial sector.In Myanmar,banks and the microfjnance sector are struggling to recover from the military takeover amid political and economic disruptions and the imposition of restrictions on some international t

332、ransactions.While banks reported adequate capital and liquidity in china,their net interest margins declined as property-related loans to developers slowed down and their NPls have been steadily going up.Furthermore,regional banks in less developed regions are increasingly exposed to the local gover

333、nment fjnancing vehicle(lGFV)debt.Vietnamese banks faced low profjtability and deteriorating asset quality.The slowdown of the real estate sector in both china and Vietnam poses substantial risks to banks that have large exposures to the sector.Policy priorities differ across eaP economies.In Vietnam,the authorities will need to ensure that banks strengthen their balance sheet,including through in