THE World Bank cut its 2014-2016 growth forecasts for developing East Asia, noting that China was likely to slow due to policies aimed at putting the economy on a more sustainable footing, and it also cautioned of capital-flight risks to Indonesia.

    The Washington-based lender expects the developing East Asia and Pacific (EAP) region to grow 6.9 percent in 2014 and 2015, down from the 7.1 percent rate it had previously forecast for both years. Growth in 2013 had been 7.2 percent.

    The bank also trimmed its 2016 growth forecast for the region to 6.8 percent from 7.1 percent.

    The World Bank said growth in China was likely to slow to 7.4 percent in 2014 and 7.2 percent in 2015, down from 7.7 percent in 2013. Growth in 2016 was seen at 7.1 percent.

    The World Bank had previously seen China’s growth coming in at 7.6 percent in 2014 and 7.5 percent in 2015 and 2016.

    “Measures to contain local government debt, curb shadow banking, and tackle excess capacity, high energy demand, and high pollution will reduce investment and manufacturing output,” it said regarding China’s outlook.

    The report noted potential risks in the region’s real estate markets. There was slim evidence of price bubbles in the larger economies, which limited chances of “significant” house price corrections. But, an abrupt financial tightening could trigger a disorderly adjustment of housing prices, the report warned.

    On China, the bank said, “A major nationwide correction in real estate prices in China remains unlikely, although there may be pressure on prices in several of the less rapidly growing provinces.”(SD-Agencies)