World Bank (WB) on Monday cut its forecast for the growth rate of the developing countries in the East Asia and Pacific (EAP) region.
The GDP growth for the EAP in 2012 is now projected to be 7.2 percent, a full percentage point down from 8.2 percent last year and also slower than their earlier assessment of 7.6 percent in this May.
"This is the slowest growth rate in the Asia Pacific region since 2001. It's even slower than the peak of the financial crisis in 2009," Bert Hofman, the Chief Economist of EAP region of WB said during the press release here.
According to the report, tensions on international financial markets have eased in recent months, following developments in Euro area and central bank action in Europe, the United States and Japan. However, their import demands from the EAP region still stay weak due to lackluster recovery in the U.S. and the recession in eurozone.
"But uncertainties remain, and should conditions in Europe deteriorate sharply, no developing region would be spared," the WB said in a statement, adding that the GDP growth in this region could drop by more than 2 percentage points in 2013 if the crisis continues to be worse.
The WB said in the report that exports growth for East Asia as a whole slowed to 4.5 percent on year in the second quarter of this year, "easily outpaced by import growth of 5.2 percent".
Hofman said, "The export number clearly show countries in the Asia Pacific clearly can't longer rely on Europe or the U.S. to drive their economies. Those drivers have to come increasingly from within. The good news is that domestic demand is thriving, especially among the large ASEAN countries."
According to the data from the report, among the large ASEAN countries, domestic demand is driving growth, with a growth rate of 9.4 percent in Q2.
The report also said China's growth rate will also slow to 7.7 percent this year, down from the assessment of 8.2 percent in May. It will move back to 8.1 percent in 2013, the WB said, considering the measures that the government adopted in both monetary and fiscal side.
"Now with the measures taken this year already on the monetary side -- reserve requirements down, interest rates down (a little bit), some liquidity through open market operations; plus, on the fiscal side, lots of announcements positioned on local level, but also acceleration of investment to improve at the central level, we believe that the growth will pick up a little bit, and therefore with something like 8.1 percent," Hofman told Xinhua.
The risk of a "hard landing" for China remains small, the WB added in the report.
For most of the developing countries in the EAP, the WB said they still have some space for accommodative policies as external demand has further moderated and inflationary pressures recede, and "in case of a major external slowdown, sufficient fiscal space for a stimulus" is still available.