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The World Bank has raised its growth forecast for China, as a result of stimulus measures and approval of infrastructure projects which will boost growth. The bank has revised its GDP growth target for China to 8.4% in 2013, up from an earlier forecast of 8.1%.
The World Bank’s upward revision of China’s growth prospects for 2013 is likely to welcomed as good news by global stockmarkets. The World Bank said “The slowdown in the Chinese economy appears to now have bottomed out. While third quarter growth, at 7.4% year-on-year, is still low compared to last year, quarter-on-quarter growth has picked up notably, reaching 9.1% in the third quarter at a seasonally-adjusted, annualised rate”.
A slowdown in China’s growth in recent months had prompted the Chinese government to announce various stimulus measures. These include two interest rate cuts since June, and the approval of infrastructure projects worth more than $150bn (£94bn).
China’s central bank, the People’s Bank of China, has also lowered the amount of money that banks need to keep in reserve three times in the past few months in an attempt to boost lending. People’s Bank of China said “The impact of easing credit conditions and public investment in infrastructure is beginning to show. The impact is expected to continue to be felt into 2013, as the authorities have accelerated the approval of large projects”.
Not all analysts agreed with the World Bank’s forecast. Andy Xie, Chinese independent economist, said “No strong growth in industry is discernible at the micro level. The recent recovery is probably just perception”.
