The World Bank’s latest quarterly economic outlook for China suggests that the economy is not slowing as rapidly as previously thought. The Bank forecasts GDP growth of 9.3% for this year. Last November, it had expected 8.7% growth, the same rate it now forecasts for 2012. China’s economy grew at 10.3% in 2010.
The Bank also warns that inflation and the property market remain a risk, with, in the latter case, the effectiveness of measures to slow down private house building in part being offset by the government’s ambitious social housing construction plans. While inflation is expected to moderate eventually as the pace of food price rises continues to slow, much of the impact of higher oil and industrial commodity prices is still working through the pipeline, so inflation expectations are high. Thus, the Bank says, the government should continue to tighten monetary policy.