China’s economic growth will fall to 8.2 percent this year due to slowing domestic consumption and weak external demand, before rebounding next year, the World Bank forecast yesterday.
The figure represents a cut in the bank’s growth forecast for China after it predicted in January that GDP in the world’s second-biggest economy would expand by 8.4 percent this year.
“The policy challenge for the near term is to sustain growth through soft landing,” the bank said in its China Quarterly Update, which forecast growth of 8.6 percent next year.
“While the prospects for a soft landing remain high, there are concerns that growth slows too quickly,” the report said.
China’s growth slowed to 9.2 percent last year from 10.4 percent in 2010, dragged down by the global slowdown and domestic tightening aimed at controlling inflation.
Beijing has since pledged to “fine-tune” policy to prevent a hard landing for the economy, which could trigger widespread job losses and spark social unrest.
“China’s gradual slowdown is expected to continue this year, as consumption growth slows somewhat, investment growth decelerates more pronouncedly and external demand remains weak,” said Ardo Hansson, the World Bank’s lead economist for China.
“The risks of overheating are moderating, increasing the prospects to achieve a soft landing,” Hansson said.
The report forecast inflation would fall to 3.2 percent this year, below the government’s target of about 4 percent.
The report added that reserve requirements could be tweaked further to ease the availability of credit, but “policy rate action should be reserved for potential downside scenarios.”
The report came a day before the government is due to release key economic indicators for the first quarter of this year, expected to show growth slowed slightly from the same period last year.