World Bank cuts growth forecast for China

BEIJING - Reuters

A worker stands on the edge of electronic equipment loading on a truck at a construction site in Beijing yesterday. AFP photo

The World Bank cut its forecast for China’s 2012 economic growth to 8.2 percent yesterday and said a rebound might not begin before the third quarter of the year as slack foreign demand and a government-induced real estate slowdown restrain a recovery.

“There is the potential for growth to be bumping along the bottom for longer,” Ardo Hansson, the World Bank’s lead economist for China, told a news conference to release the multilateral lender’s quarterly update on China.

The Bank’s new growth forecast for the world’s second-biggest economy would mark a 13-year low, compared with an 8.4 percent, 11-year-low estimate in November 2011.

An 8.2 percent expansion ould mean China’s economy was growing slightly below its potential rate, Hansson said. In economic terms, it implies Beijing has space to tweak policies to boost growth without igniting inflation.

“We see cyclical weakness continuing, but that the prospects for a soft landing remain high,” Hansson said, adding that Beijing had considerable fiscal resources available to help bolster the economy if risks to the downside accelerate.

The Bank’s economics team believes that when recovery does come, most likely by the middle of the year, but possibly not before the third quarter, its shape would be somewhere between a vigorous ‘V’ and a flat ‘L’.

Though the report characterizes the bounce as mild, it is faster than expected in November, when 2013 growth was estimated at 8.4 percent compared with 8.6 percent in the latest report.

The World Bank forecast China’s export growth at 9.7 percent this year and 11.6 percent in the next, with import growth likely at 12 percent in 2012 and 12.5 percent in 2013.