World Bank predicts a soft landing next year
By Louise Ho |
November 23, 2011, Wednesday
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Print Edition
Print Edition
CHINA is heading for a soft landing next year although it faces continuing risks from Europe's sovereign debt crisis and domestic tightening, the World Bank said in a report released yesterday.
In its biannual economic update on East Asia and Pacific, the World Bank said China's GDP growth will slow from this year's 9.1 percent to 8.4 percent in 2012.
Expansion in Developing East Asia, excluding China, is also slowing from 8.2 percent this year to 7.8 percent next year due to declining demand from developed countries, it said.
Developing East Asia excludes Japan, South Korea, Singapore and India.
"We believe that while there are issues (in China), they are being managed and the magnitude of those issues does not add up to something that would lead necessarily to a major slowdown as some have talked about," said Bert Hofman, World Bank chief economist for East Asia and the Pacific.
Although China's decelerating growth has curbed lending and affected private investment, the bank also noted that China's receding inflation since July allows space for an easing monetary policy.
The bank projects China's inflation rate to slow to 4.1 percent next year "but will remain elevated."
The World Bank said markets have been worried of an overheating property market, but relief comes in more social housing construction, more land supply and recent waning inflation.
Affected by weakening demand in advanced economies, China's trade growth is also easing as export growth is slower than import growth, resulting in a lower trade surplus at US$13.7 billion in September.
The World Bank said China and East Asia were becoming a more important source of global demand.
Since the financial crisis affected developed countries, China's rising share in world imports has approached 10 percent in global GDP.
China's imports of consumer goods for domestic consumption have also been increasing at a fast pace, which are benefiting the region's manufacturing exports.
The World Bank said countries with high levels of investment, such as China, should encourage investments aimed at domestic consumption.
"Higher investment in infrastructure, education and social security systems can help countries increase productivity and move toward higher value added production," said Ekaterina Vostroknutova, the World Bank senior economist who was the lead author of the report.
Last week, China's central bank said the country still needed to have price stability.
And Chinese Vice Premier Wang Qishan said over the weekend that the world has entered into chronic recession and China should worry about its own economy.
In its biannual economic update on East Asia and Pacific, the World Bank said China's GDP growth will slow from this year's 9.1 percent to 8.4 percent in 2012.
Expansion in Developing East Asia, excluding China, is also slowing from 8.2 percent this year to 7.8 percent next year due to declining demand from developed countries, it said.
Developing East Asia excludes Japan, South Korea, Singapore and India.
"We believe that while there are issues (in China), they are being managed and the magnitude of those issues does not add up to something that would lead necessarily to a major slowdown as some have talked about," said Bert Hofman, World Bank chief economist for East Asia and the Pacific.
Although China's decelerating growth has curbed lending and affected private investment, the bank also noted that China's receding inflation since July allows space for an easing monetary policy.
The bank projects China's inflation rate to slow to 4.1 percent next year "but will remain elevated."
The World Bank said markets have been worried of an overheating property market, but relief comes in more social housing construction, more land supply and recent waning inflation.
Affected by weakening demand in advanced economies, China's trade growth is also easing as export growth is slower than import growth, resulting in a lower trade surplus at US$13.7 billion in September.
The World Bank said China and East Asia were becoming a more important source of global demand.
Since the financial crisis affected developed countries, China's rising share in world imports has approached 10 percent in global GDP.
China's imports of consumer goods for domestic consumption have also been increasing at a fast pace, which are benefiting the region's manufacturing exports.
The World Bank said countries with high levels of investment, such as China, should encourage investments aimed at domestic consumption.
"Higher investment in infrastructure, education and social security systems can help countries increase productivity and move toward higher value added production," said Ekaterina Vostroknutova, the World Bank senior economist who was the lead author of the report.
Last week, China's central bank said the country still needed to have price stability.
And Chinese Vice Premier Wang Qishan said over the weekend that the world has entered into chronic recession and China should worry about its own economy.
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