Economy

World Bank estimates China’s economy to grow at 9.3% this year

PTI Beijing | Updated on June 09, 2011 Published on June 09, 2011

Showing signs of slowing down from a double-digit growth, the China’s economy is poised to grow at the rate of 9.3 per cent this year, followed by 8.7 per cent next year, World Bank economists have said.

The country’s economy is predicted to grow by 9.3 per cent this year, before slowing to 8.7 per cent in 2012 and 8.8 per cent in 2013, said the World Bank forecast in its twice-yearly Global Economic Prospects report, which was released on Wednesday.

“What we’re seeing now is a moderate slowdown,” Mr Ardo Hansson, lead World Bank economist in China, said.

“A moderation in high growth is something that could be welcome,” he told the state-run China Daily.

He said the across-the-board slowdown indicates that the policies the government has adopted are beginning to work.

Interest rates are still one percentage point below the level before the crisis and if inflation is taken into account, “We see a lot of room for further tightening,” he said.

The government should use interest rates for more than administrative measures to handle economic growth in the long-term, he said.

A recent index on factory output raised concerns over a possible hard landing for the economy. The purchasing managers’ index, a key gauge of manufacturing activity, hit a nine-month low of 52 in May.

Another index due to be released, the consumer price index (CPI), an indicator of inflation, was forecast to reach a 34-month high of 5.5 per cent year-on-year for the same month.

To soak up liquidity and curb inflation, the central bank has raised interest rates four times since October and has also increased the reserve requirement ratio for banks eight times over the same period to a record 21 per cent for major lenders.

Mr Hansson said the biggest risk facing the economy is not inflation, but the property market, which has been rising despite the government’s cooling policies.

Mr Hans Timmer, director of development prospects at the World Bank, said decision-makers should focus more on signs that the economy is hitting its growth limits and indications of this are apparent not only in the inflation rate, but in the real estate market.

Published on June 09, 2011
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