World Bank sees 2013 China growth of 7.7 percent
Updated: 2013-06-13 11:54
By Joseph Boris in Washington (China Daily)
Despite receding risks from advanced economies, global growth is likely to be "muted" for the next few years as expansion in China and other developing countries slows, the World Bank forecasts in a new report.
Global GDP is expected to grow by 2.2 percent this year before strengthening to 3.0 percent and 3.3 percent in 2014 and 2015, respectively, the lending institution said in its semiannual Global Economic Prospects report, published on Wednesday.
In developing countries, GDP growth for 2013 is projected to be 5.1 percent before reaching 5.6 percent and 5.7 percent over the following two years. In China, where the government's target of 7.5 percent for 2013 was buoyed by first-quarter growth of 7.7 percent, the slower pace compared to previous years is due to the country's shift to a consumer demand-driven economy, the World Bank said.
The report predicted Chinese growth this year of 7.7 percent, slightly higher than the official estimate, followed by 8.0 percent and 7.9 percent in 2014 and 2015.
Broken down by region, the report predicts growth this year in East Asia and the Pacific of 7.3 percent (5.7 percent if China is excluded); Europe and Central Asia, 2.8 percent; Latin America and the Caribbean, 3.3 percent; the Middle East and North Africa, 2.5 percent; South Asia, 5.2 percent; and sub-Saharan Africa, 4.9 percent.
Beyond China, growth in big developing countries like Brazil, Russia, India, South Africa and Turkey is being held back by supply-chain "bottlenecks" that limit productivity gains, according to the report. Internal constraints have replaced the risks these "middle-income" nations previously faced from advanced economies - namely debt crises in Europe and the United States' pullback in January from what would have been a series of forced tax increases and budget cuts known as the fiscal cliff.
Although the developing world's growth will likely outpace that of higher-income countries, "it is significantly slower than what we've been accustomed to in the pre-crisis period [before 2008], but we see this slower growth - still robust, still strong - as something of a new normal for developing countries", said Andrew Burns, global macroeconomics manager at the World Bank and lead author of the report.
Some countries in the euro zone have sunk into recession while the US remains mired in a slow recovery with weak job creation, but external threats lie elsewhere, Burns said. Developing nations could be hurt by inflation driven by continued loose-money policies of developed countries' central banks, or higher interest rates if the US Federal Reserve changes course and tapers its quantitative-easing program of buying Treasury bonds and mortgage-backed securities.
"We think developing countries are going to be robust [in facing] these changes," he said, "but nevertheless they are a cause for concern, and we think that policy makers need to start to shift their focus from the external world more to their domestic preparedness for these more difficult situations going forward."
World Bank President Jim Yong Kim, interviewed by the Wall Street Journal on the sidelines of an economic forum in Montreal on Wednesday, said the lending institution is closely monitoring possible "spillover effects" from central banks' curtailing of policies intended to stimulate domestic consumption.
To combat these pressures, the new World Bank report recommends that most developing countries carry through on structural reforms to boost the supply side of their economies, by reducing the cost of doing business, increasing openness to foreign trade and investment, and investing in infrastructure and work force development.
"These measures underpinned strong developing-country growth over the past 20 years and are worth sticking with," Burns said.
(China Daily USA 06/13/2013 page2)