Growth in the Asia-Pacific economies is expected to decelerate slightly to about 5.3 percent during 2016–17, according to the latest Regional Economic Outlook for Asia and Pacific, published on May 3, 2016. While Asia remains the engine of the global economy, the moderation in regional growth reflects the sluggish global recovery and slowing global trade. As external demand remains relatively subdued and global financial conditions have started to tighten, domestic demand is expected to be a major driver of activity across most of the region. The report finds that policy settings are appropriate across most of the region, but implementing structural reforms is critical to bolstering potential growth and reducing potential vulnerabilities. The report also covers China’s spillovers to Asia, implications of China’s rebalancing for trade, and inequality in the region.