East Asian economies should redouble efforts to cushion the possible impact emanating from China and the United States down the road, the World Bank Group said Sunday in a new report.
The Washington-based institute said East Asia is expected to grow 6 percent this year and 6.4 percent in 2014, down 0.5 and 0.3 percentage point from its previous forecasts half a year ago.
"East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world's GDP growth -- more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty, and improve the lives of the poor and vulnerable," said Axel van Trotsenburg, the World Bank East Asia and Pacific Regional vice president.
The World Bank Group issued the report ahead of this week's annual meetings, together with the International Monetary Fund, that will take place in the U.S. capital.
The three-day session from Friday will bring together central bankers, finance ministers, private sector executives and academics to discuss global economic concerns.
South Korea will be represented by Finance Minister Hyun Oh-seok and Bank of Korea Gov. Kim Choong-soo.
The World Bank Group said risks remain related to the restructuring of China's economy.
A greater than expected slowdown of investment could have an adverse effect on the region, especially on suppliers of capital goods and industrial raw materials to China, it said.
It also pointed out a shift in the U.S. monetary policy would also pose challenges for countries especially with large foreign participation in their financial markets.
In September, the Federal Reserve decided to delay tapering, stabilizing markets for now and giving countries some more time to take measures to lower risks from future volatility, the institute said.
But experts regard tapering as a matter of time, even if the ongoing government shutdown and the possibility of a default are a fresh source of uncertainty.
Japan's "Abenomics," a new strategy to revive the nation's growth, is another double-edged sword for the region, as it could increase Japan's investment in the region but also hurt the competitive edge for other industrialized nations.
"The expansive fiscal and monetary response to the global economic crisis has also built up vulnerabilities in many countries. Authorities need to be ready to respond to a steady increase in interest rates in advanced economies, and redouble their efforts to restore and maintain financial stability," the World Bank Group said.
"Countries need to improve their investment climate and invest more in infrastructure, while making public investment more efficient."