World Bank upgrades China growth forecast

by Richard Kilner

Story link: World Bank upgrades China growth forecast

In a further sign of the global economic downturn coming to an end, the World Bank has revised its growth forecasts for China up from 6.5% to 7.2%.

However, the World Bank has set a cautious tone despite its upward revision of China’s economic future.

Consumption in the world’s most populous country has remained steady, with the main hurdle to more rapid growth being persistently weak exports.

Although global deflation remains a possibility, the World Bank has asserted that it is now unlikely, although spare capacity will create downward inflationary pressure for the short-term.

The World Bank has also stressed that China’s continued growth requires a stronger market for domestic consumption rather than an economy based heavily on exports which may be slow to recover as wealthy Western nations rebound gradually.

The upgrading of China’s economic forecast echoes remarks made by Governor Glenn Stevens of the Reserve Bank of Australia who described China as one of the clearest examples of an economic turnaround.

However, Governor Stevens went on to say that the recovery in most countries would be gradual and unsteady.