China's Economic Growth to Slow to 8.7% in 2011 From 10%, World Bank Says
China GDP to Grow 8.7% in 2011, Down From 10%,
Forbes Conrad/Bloomberg
China’s economy will grow 8.7 percent in 2011, down from 10 percent last year, as the government tries to limit increases in asset prices, the World Bank said.
China’s economy will grow 8.7 percent in 2011, down from 10 percent last year, as the government tries to limit increases in asset prices, the World Bank said. Photographer: Forbes Conrad/Bloomberg
Jan. 10 (Bloomberg) -- Shen Jianguang, chief economist at Mizuho Securities Asia Ltd., discusses the outlook for China's monetary policy and economy. Shen speaks from Beijing with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
China’s economy will expand 8.7 percent in 2011, down from 10 percent last year, as the government tries to limit increases in asset prices, the World Bank said.
China’s growth will ease partly because of “the unwinding of fiscal stimulus, restrictions placed on overheating sectors,” such as housing, and a tighter monetary policy, the bank said in a report released yesterday. The Washington-based lender forecast China’s economy to grow 8.4 percent in 2012.
Premier Wen Jiabao’s government raised borrowing costs twice last year and may take measures to “guard against asset- price increases, strained local government finances and a buildup of non-performing loans in the banking system,” the Washington-based lender said. China has considerable scope for more rate increases, Vikram Nehru, the bank’s chief economist for East Asia and the Pacific, said in Beijing today.
Inflation in China accelerated to 5.1 percent in November from a year earlier, the fastest pace in 28 months, driven by higher food costs. The benchmark one-year deposit rate stands at 2.75 percent, while the lending rate is 5.81 percent.
The bank expressed concerns about the possibility of so- called asset bubbles in the East Asia and Pacific region, whose largest economies include China, Indonesia, Thailand and Malaysia. The region is forecast to grow 8 percent in 2011, down from 9.3 percent in 2010, according to the report. Growth for 2012 is projected to be 7.8 percent.
Capital Inflows
“Many countries in the region saw a surge in international capital inflows during the second half of 2010, evidenced in rising equity values and appreciating currencies, with the potential -- as increased liquidity moved through local economies -- to trigger higher inflation, or to sow the seeds of asset bubbles,” the lender said.
Indonesia’s economy is forecast to grow 6.2 percent this year and 6.5 percent in 2012, up from 5.9 percent in 2010. After 7.5 percent growth last year, Thailand is projected to grow 3.2 percent in 2011, the bank said.
After 15 percent growth in the first quarter of last year, Thailand’s GDP declined both the second and third quarters “as the political turmoil of April and May adversely affected tourism arrivals and services exports,” the bank reported.
To contact the reporter on this story: Ian Katz in Washington at ikatz2@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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