China’s growth to slow to 8.2% in 2012: WB

BEIJING – China’s economic growth will fall to 8.2% this year due to slowing domestic consumption and weak external demand, before rebounding in 2013, the World Bank forecast on Thursday, April 11.

The figure represents a cut in the bank’s growth forecast for China after it predicted in January that gross domestic product in the world’s second biggest economy would expand 8.4% this year.

“The policy challenge for the near term is to sustain growth through soft landing,” the bank said in its China Quarterly Update, which forecast growth of 8.6% next year.

“While the prospects for a soft landing remain high, there are concerns that growth slows too quickly.”

China’s growth slowed to 9.2% last year from 10.4% in 2010, dragged down by the global slowdown and domestic tightening aimed at controlling inflation.

Beijing has since pledged to “fine-tune” policy to prevent a hard landing for the economy, which could trigger widespread job losses and spark social unrest.

“China’s gradual slowdown is expected to continue into 2012, as consumption growth slows somewhat, investment growth decelerates more pronouncedly and external demand remains weak,” said Ardo Hansson, the World Bank’s lead economist for China.

“The risks of overheating are moderating, increasing the prospects to achieve a soft landing.”

The World Bank report forecast inflation would fall to 3.2% in 2012, below the government’s target of around four percent.

It said reserve requirements could be tweaked further to ease the availability of credit, but “policy rate action should be reserved for potential downside scenarios.”

China’s central bank in February cut the amount of cash banks must hold in reserve for the second time in three months as policymakers moved to increase lending and boost domestic consumption.

The World Bank report came a day before the government is due to release key economic indicators for the first quarter of 2012 expected to show growth slowed slightly from the same period in 2011. – Agence France-Presse