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World Bank: China growth at 7.7%
June 14, 2013, 6:10 am

China's factory activity shrank for the first time in seven months in May [Xinhua]

China’s factory activity shrank for the first time in seven months in May [Xinhua]

The World Bank has slightly scaled down its forecast of global economic growth rate to 2.2 per cent for this year.

However, the world economy will strengthen to three per cent and 3.3 per cent in 2014 and 2015, respectively, the lending institution said in its semiannual Global Economic Prospects report, published on Wednesday.

The report described the growth as “muted” while expansion in China and other developing countries slows.

The report predicted Chinese growth this year will be 7.7 per cent, slightly higher than the official estimate, followed by eight per cent and 7.9 per cent in 2014 and 2015.

Broken down by region, the report predicts growth this year in East Asia and the Pacific of 7.3 per cent (5.7 per cent if China is excluded); Europe and Central Asia, 2.8 per cent; Latin America and the Caribbean, 3.3 per cent; the Middle East and North Africa, 2.5 per cent; South Asia, 5.2 per cent; and sub-Saharan Africa, 4.9 per cent.

Developing countries’ GDP is now projected to grow around 5.1 per cent this year, 0.4 percentage point lower than the World Bank’s January forecast, before strengthening to 5.6 per cent and 5.7 per cent in 2014 and 2015, respectively.

High-income countries’ GDP is predicted to edge up 1.2 per cent this year, slightly lower than the earlier estimate of 1.3 per cent, before picking up pace to two per cent in 2014 and 2.3 per cent in 2015, noted the twice-yearly report.

Growth in Brazil, India, Russia, South Africa and Turkey has been held back by supply bottlenecks. While external risks have eased, growth in these countries is unlikely to reach pre-crisis rates unless supply-side reforms are completed. In China, growth has also slowed as authorities seek to rebalance the economy, said the report.

“While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted,” said Kaushik Basu, Senior Vice President and Chief Economist at the World Bank.

This is reflected in the stubbornly high unemployment in industrialized nations, with unemployment in the eurozone actually rising, and in the slowing growth in emerging economies, Basu said.

Xinhua and Agencies