World Bank trims China's growth forecast to 8.2%
By Wang Yanlin |
April 13, 2012, Friday
|
Print Edition
Print Edition
THE Chinese economy is in the midst of a gradual slowdown, the World Bank said yesterday in its China Quarterly Update.
It has revised its forecast of China's economic growth this year to 8.2 percent from a previous 8.7 percent.
The revision came a day after the Asian Development Bank cut its previous forecast of 9.1 percent to 8.5 percent.
"A weaker global economic environment and tighter domestic policies combined to slow China's GDP growth," the World Bank update said. "Such weakness is expected to dominate the near-term outlook, with growth projected at 8.2 percent in 2012."
Both banks' forecasts are higher than the Chinese government target of 7.5 percent growth this year.
Ardo Hansson, the World Bank's lead economist for China, said: "China's consumption growth slows somewhat, investment growth decelerates more pronouncedly, and external demand remains weak. The risks of overheating are moderating, increasing the prospects to achieve a soft landing."
In comparison, the ADB is still positive about China's investment and consumption rates, saying they can drive the country's economic advance even as exports weaken.
China's National Bureau of Statistics is set to release a battery of economic data this morning, covering first-quarter GDP and March industrial production, retail sales and fixed-asset investment. Analysts are forecasting growth to slow in the latest quarter to 8.5 percent.
The World Bank said the main risks to a soft landing in China include the weak and uncertain growth prospects of developed economies and the impact of a slowdown in China's property market.
"Sufficient policy space exists to respond to downside risks, but any policy response will need to be carefully crafted by decision makers to keep in mind longer-term effects and objectives," the update said.
The bank said fiscal stimulus should ideally be less dependent on government spending and massive infrastructure projects. Reserve requirements on banks could be tweaked further to expand liquidity in the banking system, with interest rate adjustment best reserved as a last resort if the economy looks headed for a harder landing.
For the property market, the World Bank said government controls have helped cool real estate sales, but China needs to move more toward letting the market set prices.
It has revised its forecast of China's economic growth this year to 8.2 percent from a previous 8.7 percent.
The revision came a day after the Asian Development Bank cut its previous forecast of 9.1 percent to 8.5 percent.
"A weaker global economic environment and tighter domestic policies combined to slow China's GDP growth," the World Bank update said. "Such weakness is expected to dominate the near-term outlook, with growth projected at 8.2 percent in 2012."
Both banks' forecasts are higher than the Chinese government target of 7.5 percent growth this year.
Ardo Hansson, the World Bank's lead economist for China, said: "China's consumption growth slows somewhat, investment growth decelerates more pronouncedly, and external demand remains weak. The risks of overheating are moderating, increasing the prospects to achieve a soft landing."
In comparison, the ADB is still positive about China's investment and consumption rates, saying they can drive the country's economic advance even as exports weaken.
China's National Bureau of Statistics is set to release a battery of economic data this morning, covering first-quarter GDP and March industrial production, retail sales and fixed-asset investment. Analysts are forecasting growth to slow in the latest quarter to 8.5 percent.
The World Bank said the main risks to a soft landing in China include the weak and uncertain growth prospects of developed economies and the impact of a slowdown in China's property market.
"Sufficient policy space exists to respond to downside risks, but any policy response will need to be carefully crafted by decision makers to keep in mind longer-term effects and objectives," the update said.
The bank said fiscal stimulus should ideally be less dependent on government spending and massive infrastructure projects. Reserve requirements on banks could be tweaked further to expand liquidity in the banking system, with interest rate adjustment best reserved as a last resort if the economy looks headed for a harder landing.
For the property market, the World Bank said government controls have helped cool real estate sales, but China needs to move more toward letting the market set prices.
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