World Bank raises China growth forecast for 2012

The World Bank has raised its forecast for mainland China's growth this year and next, citing easing credit conditions and a pickup in investment, but projected a slowdown in 2014.

The mainland's gross domestic product (GDP) may expand 7.9 per cent this year, the lowest since 1999 and below the 9.3 per cent growth rate posted in 2011, the World Bank said in its East Asia and Pacific Economic Update issued yesterday.

The forecast was higher than a projected expansion of 7.7 per cent made by the World Bank in October. Acceleration in industrial production and fixed-asset investments "suggested that China's economy was bottoming out," the bank said. Beijing's official target for 2012 calls for 7.5 per cent growth.

The World Bank also lifted its forecast for 2013 GDP growth to 8.4 per cent from a previous estimate of 8.1 per cent.

The projections reflect the weak external environment, property market corrections and the impact of supportive policy measures, the World Bank said. "Downside risks remain in the uncertainty of the euro area, China's biggest trade partner", it noted.

Inflation will moderate to 2.8 per cent in 2012, and may rise to 3.3 per cent in 2013 due to a rebounding economy and the lagging effects of an accommodative monetary policy, it said.