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WB keeps 2018 global growth forecast, ups 0.1% for China

A shopping mall under construction in Chongqing, China Photo: Reuters

The World Bank has kept its growth forecast for the global economy unchanged at 3.1 percent in 2018 but raised its estimate for China's growth to 6.5 percent, or 0.1 percent higher than its prediction of 6.4 percent in January.

In its latest Global Economic Prospect report released on Tuesday, the World Bank said China's GDP growth was 6.8 percent year-on-year in the first quarter of 2018, and the economy had remained on track after it registered a 6.9 percent growth in 2017.

Data for the second quarter showed that China’s economy continued to be resilient, laying a solid foundation for stable growth in the second half of the year, according to the Washington-based international lender.

The World Bank report apparently threw its weight behind relatively optimistic estimates over China’s economy in 2018 and silenced some analysts who said China may face  growth headwinds in the second half of the year and the authorities would fine tune policies to stabilize growth if the situation unexpectedly sours.

The World Bank said China's economic structure has improved, with its activity continuing to shift to consumption and the country also made progress in implementing reforms and economic opening-up.

"Authorities in China have implemented a wide range of reforms in recent years. These include steps to reduce excess capacity in the industrial sector. Notable progress has been made on mixed-ownership reforms aimed at diversifying the ownership structure of State-owned enterprises."  said the bank in its report.

However, the World Bank also warned that China faced some policy challenges as it pursues stable and balanced growth, “The key economic policy challenge is to manage the transition to slower but more balanced and sustainable growth.”

This would require continued implementation of reforms to reduce financial vulnerabilities, promote market competition and private sector development, reallocate capital and labour toward more productive firms and sectors, and foster innovation through stronger intellectual property rights protection as well as additional research and development, analysts said.

Globally, in its latest report, the World Bank kept its January forecast of 3.1 percent growth for the world economy in 2018 before slightly dropping to 3 percent in 2019 and 2.9 percent in 2020.

The bank also warned against the risks of escalating trade protectionism, which it said may "have major adverse consequences for global trade.

Growth in advanced economies was expected to moderate slightly to 2.2 percent in 2018 and further slow down to 2 percent in 2019 as central banks gradually removed monetary stimulus, the bank said.

The growth in emerging and developing economies was projected at 4.5 percent in 2018 before moving to 4.7 percent in 2019, a slight rise of 0.2 percent as “the recovery in commodity exporters matures and commodity prices level off following this year’s increase”, according to the bank report.

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