World Bank lowers its forecast for China
Print Edition
The World Bank has lowered its expectation of China’s economic growth this year to 7.7 percent from the previous 8 percent.
But it said such a rate was still a strong support for a firming world economy.
“The world economy is projected to strengthen this year, with growth picking up in developing countries and high-income economies appearing to be finally turning the corner five years after the global financial crisis,” the bank said in its Global Economic Prospects report yesterday.
“The firming of growth in developing countries is being bolstered by an acceleration in high-income countries and continued strong growth in China,” it said.
The bank estimated the full-year growth for China to be around 7.7 percent, but said the country’s quarterly pace may slow somewhat toward the second half of the year, with growth projected to stabilize at around 7.5 percent in 2015 and 2016.
China’s gross domestic product expanded 7.7 percent from a year earlier in the first nine months of 2013, with the third-quarter rate accelerating to 7.8 percent from 7.5 percent in the second quarter.
Some analysts expected the full-year growth for 2013 would be around 7.6 percent.
“In China, concern over high levels of investment and associated lending prompted authorities to adopt a program designed to restructure the economy away from a policy-induced investment-led model,” the bank said.
“Successfully engineering such a restructuring represents a formidable challenge. Although a tail risk, an involuntary abrupt decline in investment rates could have significant impacts on Chinese GDP, and important knock-on effects in the region,” it said.
The bank said global GDP is expected to firm from 2.4 percent in 2013 to 3.2 percent this year, stabilizing at 3.4 percent and 3.5 percent in 2015 and 2016.
It expected the US economy to grow by 2.8 percent this year from 1.8 percent in 2013, and growth in the euro area, after two years of contraction, will be 1.1 percent.
Growth in developing countries may pick up from 4.8 percent in 2013 to a slower than expected 5.3 percent.
While the main tail risks that have preoccupied the global economy have subsided, challenges remain, the bank said.
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