China’s GDP is expected to grow by 8.5% in 2021
According to the World Bank, due to suppressed demand and strong exports. China’s annual GDP growth rate expected to reach 8.5% by 2021. The World Bank updated its economic forecasts in its regional economic report on Tuesday.
It stated that this marked a 0.6 percentage point increase in the World Bank’s forecast for December 2020. Which was mainly due to stronger-than-expected foreign demand.
The World Bank also predicts that China’s GDP growth rate may slow to 5.4% year-on-year after the low base effect dissipates in 2022. It reflects efforts to gradually reduce risk and deleverage, normalization of policies, and a reduction in net export support.
This forecast number remains unchanged from the forecast number in the Global Economic Outlook report released by the bank in Washington on June 8.
The new report said that thanks to the improvement of consumer and business confidence, the improvement of labor market conditions. However, Private domestic demand will replace public investment and exports as the primary driving force for China’s economic recovery.
At the same time, World Bank economists believe that the risk of persistently high inflation in China is low. The upward risk of consumer inflation seems limited at present, although ex-factory prices are more sensitive to commodity price increases.
The report pointed out that in China, high upstream inflation partially transformed into intermediate product inflation. But there is almost no inflation in downstream consumer products other than food.
As China’s recovery consolidates, macroeconomic policies expected to shift from easing to a more neutral environment. Martin Reizer, director of the World Bank’s China Region. He suggested that the pace of “policy normalization” should determined based on domestic, foreign economic data and the recovery process.
The report mentioned that several challenges China faces in the medium term include population headwinds, slower productivity growth and a carbon-intensive production structure.
Sebastian Eckardt, China’s chief economist at the World Bank, said that in the medium term, policymakers should “double their efforts” to promote structural reforms that promote growth and lead the economy to a greener economy, A more flexible and inclusive development path.
World Bank economists said that a more progressive tax system. Human capital investment and a stronger social safety net to reduce income inequality should be the main areas of China’s economic reforms. Which will help achieve high-quality growth.