World Bank cuts its China growth figures
THE WORLD Bank yesterday cut its growth forecasts for China this year as it called on the country to rely on easier fiscal policy to boost consumption rather than state investment.
The bank now expects the country’s economy to expand 8.2 per cent in 2012, down from an earlier forecast of 8.4 per cent and down sharply from the 9.2 per cent expansion recorded for last year.
The slower rate of increase forecast for Chinese growth, the world’s second largest economy and heavily exposed to the Eurozone through its exports, is stark enough to drag down the World Bank’s forecast for all East Asia from 7.8 to 7.6 per cent.
“China’s near-term policy challenge is to sustain growth through a soft landing,” it said.
“With external demand likely to remain weak for the foreseeable future, East Asia’s continued high growth rates will need to be linked less to an export-oriented model.”
It suggested measures to support consumption such as tax cuts, while steering clear of huge state infrastructure spending, which the Chinese government relied upon during a similar downturn in 2008.
Elsewhere, recovery in Thailand and Japan following last year’s natural disasters is lifting growth.