East Asia economy continues to lead global growth: WB

The World Bank forecast the economies in East Asia would expand at a slower pace this year, but kept leading the global growth at 7.1 percent, according to a report released by the bank in Bali Monday.  [Special coverage]

The bank said that China's shifting from export-oriented economy to domestic-demand orientation contributed to the slow of the economic expansion.

The economic growths in larger middle income countries, including Indonesia, Malaysia and Thailand were projected to slow due to lower investment, and weakened export values.

Next year, the bank forecast the region's economy to expand by 7.2 percent. The growth target this year and next year was slightly lower than the bank previous projection in April.

"East Asia-Pacific continues to be the engine driving the global economy, contributing 40 percent of the world's GDP growth, more than other region," Axel van Trotsenburg, World Bank East Asia and Pacific Regional vice president said in the statement.

He suggested the developing economies in East Asia make structural and policy reform to sustain growth.

The bank expected China's economy to expand by 7.5 percent this year and 7.7 percent next year, but risks remain related to the structuring of China's economy.

Excluding China, the region was expected to grow at 5.2 percent this year and 5.3 percent next year, contributed by domestic to stock demand. But investment growth was moderate in the larger economies of ASEAN such as Indonesia, Thailand and Malaysia.

The economic growth in smaller economies in the region was more encouraging.

Bert Hofman, World Bank East Asia and Pacific chief economist said that the speculation about the withdrawal of quantitative easing in the U.S. had hit stock market and currencies, exiting foreign capitals from the economies.

"The Federal Reserve's decision to delay tapering stabilized market for now, giving the economies a second opportunity to take measures to lower risk from future volatility," he said on the statement.

The risks of the Fed's decision may also be offset by " Abenomics," Japan new strategy to revive economic growth, which could raise Japanese investment in the region.

Asia-Pacific has the greatest potential as the source of economic growth, Indonesian President Susilo Bambang Yudhoyono said on Sunday.

The growth in the region may contribute on the acceleration of the global economic growth, he said.