The World Bank raised its forecast for China’s GDP growth in 2013 to 8.4% from its projection of 8.1% made in October. In the latest edition of its East Asia and Pacific Economic Update, the Bank says it expects China’s growth rate to be 7.9% this year, down from 2011’s 9.3% and the lowest rate since 1999. Weak export growth and government efforts to deflate the housing bubble weighed on growth. A sign of how much global demand has weakened during this year is that back in January, the Bank had forecast 8.4% growth for 2012.
The Bank says that a pick-up in factory output and investment suggests that the recent slowdown in the economy has bottomed out in the wake of easier credit conditions and public spending on infrastructure. The effects of both of these stimuli will be felt more powerfully next year. Beyond that, the Bank projects that China’s potential growth will gradually slow, as investment levels off and productivity increases and labor force growth start to slow. Its 2014 projection of 8% growth reflects that.