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WB lowered China's growth estimate to 7.7% in 2012

By Wei Tian  (China Daily)

13:12, October 08, 2012

China's GDP growth may fall to 7.7 percent this year because of weak exports and lower investment growth, the World Bank said in a new report on Monday.

In 2013, however, China's growth is expected to rebound to 8.1 percent as the impact of stimulus measures kicks in, supported further by an uptick in global trade, said the World Bank in its East Asia and Pacific Economic Data Monitor.

The World Bank's forecast for the expansion of the world's second largest economy was down from the April prediction of 8.2 percent.

"China's growth of domestic demand in real terms has come down from last year, and GDP growth in the second quarter grew only by 7.6 percent compared to a year ago. Investment growth has slowed in particular, driven by last year's measures to rein in investments in real estate," the report says.

However, relaxation in monetary policy earlier this year and local and central government stimulus measures could again reverse this trend in months to come, it said.

Lower estimate for East Asia

Economic growth in the East Asia and Pacific region may slow down by a full percentage point from 8.2 percent in 2011 to 7.2 percent this year, before recovering to 7.6 percent in 2013. Growth in developed countries will remain modest, with recovery in the region to be driven mainly by strong domestic demand in developing countries.

"The East Asia and Pacific region's share in the global economy has tripled in the last two decades, from 6 percent to almost 18 percent today, which underscores the critical importance of this region's continued growth for the rest of the world," said World Bank Group President Jim Yong Kim.

"Even under difficult global circumstances, poverty in the region will continue to decline, with the share of people living on $2 a day expected to reach 24.5 percent by the end of 2013, down from 28.8 percent in 2010," said Pamela Cox, World Bank East Asia and Pacific Regional Vice President. "Weaker demand for East Asia's exports is slowing the regional economy, but compared to other parts of the world, it's still growing strongly, and thriving domestic demand will enable the region's economy to bounce back to 7.6 percent next year."

The report cites reconstruction spending in Thailand after last year's floods as among the factors buttressing domestic demand in the region. In addition, countries like Indonesia – together with Thailand and Malaysia – are currently enjoying a boom in spending by their governments and the private sector on capital goods.

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