Good but uncertain times: a time to prepare

Our Regional Economic Outlook suggests a strong global and regional growth momentum. But there are also clouds on the horizon for which all need to prepare and now is the time to do it. China's reforms have stabilized the economy and progress has been made in financial deleveraging. Key will be to stay the course.

As we note in our recently released "Regional Economic Outlook", the Asia-Pacific region remains the main engine of the global economy, and near-term prospects have improved since our report of October 2017. But there are many risks on the horizon, including a tightening of global financial conditions, a shift toward protectionist policies, and an increase in geopolitical tensions. In addition, over the longer run, Asian economies will face major challenges from aging population and slowing productivity growth, as well as the rise of the digital economy, which could yield huge benefits but also bring major disruptions.

Given these uncertainties, macroeconomic policies in the region should be conservative and aimed at building buffers and raising resilience, while taking advantage of strong economic conditions to implement structural reforms to promote sustainable and inclusive growth. Regional growth is expected to remain strong at 5.6 percent in 2018 and 2019 - up about 0.1 percentage points from our previous forecast - supported by strong global demand and favorable financial conditions.