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WB notches up China growth forecast to 9.3%
By Wang Yanlin |
April 28, 2011, Thursday
|
Online Edition
Online Edition
The World Bank has raised its forecast for China's 2011 economic growth rate to 9.3 percent from 9 percent and called for full normalization of the macroeconomic stance to contain risks of inflation and the property market.
"China's economic outlook remains broadly favorable with real gross domestic product growth projected at 9.3 percent in 2011 and 8.7 percent in 2012," the Washington-based bank said in its China Quarterly Update released today.
"Risks on inflation and the property market call for full normalization of the macroeconomic stance to keep growth on track," the quarterly report said.
China has shifted to a prudent monetary policy stance since the end of last year, while kept the fiscal policy stance relatively easy to sustain growth.
To combat inflation and runaway home prices, China's central bank has increased the interest rates twice so far this year and lifted the reserve requirement ratio four times to soak up market liquidity.
The report said it found both fiscal and monetary policies contributed to China's tightening of its macroeconomic policy after the end of its massive stimulus package to offset the impact of the global financial crisis.
"Headwind from a normalized macroeconomic stance, inflation, and somewhat slower global growth is likely to be partly offset by solid corporate investment and a still robust labor market," said Ardo Hansson, lead economist for China at the bank.
The report said inflation should moderate eventually from a 32-month high of 5.4 percent in March, with food price increases slowing and core inflation still being in check.
"However, much of the impact of the higher oil and industrial commodity prices is still in the pipeline, inflation expectations are high and there is little spare capacity in the economy," said Louis Kuijs, senior economist and the main author of the report. "Therefore, a full normalization of the macro policy stance is important."
Kuijs said macro policy is better placed to address the risks on inflation and the property market than moral suasion and administrative measures. But the government should maintain fiscal and monetary flexibility to better deal with possible risks.
China's gross domestic product expanded 9.7 percent from a year earlier to 9.63 trillion yuan (US$1.45 trillion) in the first quarter, little changing from the pace of 9.8 percent in the previous three months.
"China's economic outlook remains broadly favorable with real gross domestic product growth projected at 9.3 percent in 2011 and 8.7 percent in 2012," the Washington-based bank said in its China Quarterly Update released today.
"Risks on inflation and the property market call for full normalization of the macroeconomic stance to keep growth on track," the quarterly report said.
China has shifted to a prudent monetary policy stance since the end of last year, while kept the fiscal policy stance relatively easy to sustain growth.
To combat inflation and runaway home prices, China's central bank has increased the interest rates twice so far this year and lifted the reserve requirement ratio four times to soak up market liquidity.
The report said it found both fiscal and monetary policies contributed to China's tightening of its macroeconomic policy after the end of its massive stimulus package to offset the impact of the global financial crisis.
"Headwind from a normalized macroeconomic stance, inflation, and somewhat slower global growth is likely to be partly offset by solid corporate investment and a still robust labor market," said Ardo Hansson, lead economist for China at the bank.
The report said inflation should moderate eventually from a 32-month high of 5.4 percent in March, with food price increases slowing and core inflation still being in check.
"However, much of the impact of the higher oil and industrial commodity prices is still in the pipeline, inflation expectations are high and there is little spare capacity in the economy," said Louis Kuijs, senior economist and the main author of the report. "Therefore, a full normalization of the macro policy stance is important."
Kuijs said macro policy is better placed to address the risks on inflation and the property market than moral suasion and administrative measures. But the government should maintain fiscal and monetary flexibility to better deal with possible risks.
China's gross domestic product expanded 9.7 percent from a year earlier to 9.63 trillion yuan (US$1.45 trillion) in the first quarter, little changing from the pace of 9.8 percent in the previous three months.
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