The World Bank lifted its 2025 GDP growth projection for China to 4.8 percent and raised its forecast for much of the region, but warned of slowing momentum next year, citing low consumer and business confidence and weak new export orders.

Publishing its biannual economic outlook for East Asia and the Pacific region on Tuesday, the World Bank said it now expected China to grow 4.2 percent next year, after forecasting in April growth of 4 percent both this year and next.

"Growth in China, the region’s largest economy, is projected to decline... because of an expected slowdown in export growth and a likely reduction in the fiscal stimulus in light of rising public debt, as well as continued structural deceleration," the authors of the report wrote.

The World Bank said it expected the rest of the East Asia and Pacific region to grow by 4.4 percent in 2025 – a 0.2 percentage point uplift – but stuck to its 4.5 percent prediction for 2026.

The lender blamed the subdued momentum on higher trade barriers, elevated global economic policy uncertainty and slower global growth, with political and policy unpredictability especially in Indonesia and Thailand adding to pressure.

"Firms adopt a 'wait-and-see' approach, delaying or scaling back capital expenditures," the report said.

Global economic growth has been under pressure this year due to a major shakeup in US economic policies. Asia, home to key export-driven economies, has been caught in the crosshairs of US President Donald Trump’s unpredictable trade policy.

Analysts expect Beijing to roll out more stimulus to support its 2025 growth target of around 5 percent. (Reuters)