After a “bumpy start to the year” the World Bank has downgraded its economic outlook for China – down 0.1 percent from the 7.7 percent forecast previously. The updated forecast was revealed in a new report, entitled Promoting Competitiveness and Sustainable Growth, which looks at the region’s performance thus far this year and delves into the implications of China’s “ambitious and comprehensive reform agenda.”
The country’s reform package was laid out last November and looks to improve on China’s long-term economic prospects over the next decade.
“If implemented, the reforms will have a profound impact on China’s land, labour, and capital markets, and enhance the long-term sustainability of its economic growth,” reads the report.
The ever-so-slight downgrade set out by the World Bank should be seen not as a sustained downturn but a temporary blip on the road to sustainable growth
Despite the rather long-sighted stance adopted by China, the fact remains that the country has been best characterised so far this year by unimpressive industrial performance and below par exports.
However, lacklustre stats are now beginning to pick up, and the World Bank expects industrial output to strengthen towards the middle of the year as external demand from developed countries gathers pace.
The ever-so-slight downgrade set out by the World Bank should be seen not as a sustained downturn but a temporary blip on the road to sustainable growth; an outlook best evidenced in the development bank’s China 2015 forecast, which remains at a steady 7.5 percent.
The World Bank’s 2014 reduction does, however, coincide with a reduced forecast for the wider East Asia and Pacific (EAP) region, and it’s region-wide outlook now reads 7.1 percent for both 2014 and 2015, down 0.1 percent from the rate forecast previously.
“A slower-than-expected recovery in advanced economies, a rise in global interest rates, and increased volatility in commodity prices on account of recent geo-political tensions in Eastern Europe serve as reminders that East Asia remains vulnerable to adverse global developments,” said Bert Hofman, Chief Economist of the World Bank’s East Asia and Pacific Region in a press release.
“Over the longer term, to keep growth high, developing East Asia should redouble efforts to pursue structural reforms to increase their underlying growth potential and enhance market confidence.”
