The World Bank cut its 2012 economic growth forecast for China to 8.2 percent, from a previous 8.4 percent. The global lender is urging China to put the focus on easier fiscal policy to boost consumption, rather than state investments to lift economic activity.
In its East Asia and Pacific economic update, the World Bank also notes, a slowing China will drag growth in emerging East Asia to two-year lows in 2012. To make matters worse, it warns Europe’s continuing debt crisis could inflict even bigger damage if it worsens.
In the near term, the World Bank says sluggish U.S. and European demand and a softening Chinese property market combined, would weigh on the Chinese economy. That’s despite the government already having taken some countering measures.
Bert Hofman, director of WB Singapore office said, "Of course, the government has already taken some measures including a reduction of the reserve requirements and over the weekend, we heard that they are starting to accelerate some of the investment approval. China has considerable fiscal space in case there is a major slow down and therefore at this point, they can still feel comfortable that they can manage any type of major slowdown but it is true that the recent data do point at least to the external side to a considerable slowdown."
.jpg)
The World Bank cut its 2012 economic growth forecast for China to 8.2 percent, from a previous 8.4 percent. The global lender is urging China to put the focus on easier fiscal policy to boost consumption, rather than state investments to lift economic activity.
