TEMPO.CO, Jakarta - Developing countries in East Asia Pacific will experience slower growth this year. According the East Asia Pacific Economic Update released by the World Bank on Monday, October 6, the region will only grow by 6.9 percent this year, a slight decrease from 7.2 percent in 2013. However, other than China, the growth rate in countries such as Vietnam, Myanmar and Cambodia will pick up next year.
"East Asia Pacific will continue to have the potential to grow at a higher rate, and faster than other developing region, if policy makers implement an ambitious domestic reform agenda," said Axel van Trotsenburg, the World Bank East Asia and Pacific Regional Vice President. The reform agenda includes removing barriers to domestic investment, improving export competitiveness and rationalizing public spending.
Meanwhile in Indonesia, the growth rate is expected to drop to 5.2 percent this year from 5.8 percent last year, because the country still relies on exporting commodities. However, despite being one of the biggest markets for Indonesia’s commodities, China's economic slowdown will not affect the country significantly. "China is a big economy and the slowdown is gradual," said Diop.
Moreover, political uncertainty might cause the investors to refrain from putting their money in the country. Ndiame Diop, the World Bank Lead Economist for Indonesia, said that the political situation could affect the investors negatively because they would not be able to read the situation in the market. "To send a positive signal to the investors, the government must show that Indonesia is serious about fiscal stability," Diop added.