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The East Asia and Pacific region continues to outperform much of the global economy, but sustaining growth and creating quality jobs will require bold and far-reaching reforms, according to the World Bank’s East Asia and Pacific Economic Update released this month.
The report projects regional growth of 4.8 percent in 2025, slightly down from 5.0 percent in 2024. Vietnam leads with projected growth of 6.6 percent, followed by Mongolia (5.9%), and the Philippines (5.3%). China, Cambodia, and Indonesia are each expected to grow at 4.8 percent, while Thailand is forecast at 2.0 percent, and Pacific Island nations at 2.7 percent.
However, despite solid economic performance, job creation has largely been concentrated in low-productivity, informal service sectors with limited upward mobility. Youth unemployment remains a concern, and women’s labor force participation continues to lag behind. Although 25 million people are expected to escape poverty by 2026, a larger share of the population remains vulnerable to falling back into poverty than those in the middle class in most countries.
“The region faces a jobs paradox—strong growth but too few quality jobs,” said Carlos Felipe Jaramillo, World Bank Vice President for East Asia and Pacific. “Bolder reforms to encourage firm entry, competition, and private capital are needed to unlock job creation and long-term prosperity.”
High-frequency economic indicators show mixed signals: retail sales are rising, but consumer confidence remains below pre-COVID levels. Industrial production is holding up, but business confidence is subdued, and export growth is weakening amid global trade tensions.
Growth is projected to slow further to 4.3 percent in 2026, with key risks including rising trade restrictions, ongoing global uncertainty, and reliance in some countries on fiscal stimulus over structural reforms.
The report emphasizes the need for investment in human capital and digital infrastructure, along with reforms to enhance skills training, improve education, and promote competition in services. With rapid advancements in AI, robotics, and digital platforms, adaptability will be crucial for firms, workers, and policymakers alike.
“The region’s export-driven, labor-intensive model lifted a billion people out of poverty,” said Aaditya Mattoo, Chief Economist for East Asia and Pacific. “Now, to meet the challenges of trade protection and automation, reforms in the business climate and education are essential for driving inclusive, high-quality growth.”
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