Business & Economy

Chinese economy will grow 1.6% in 2020, 7.9% in 2021: World Bank

By Victor Escribano Calderón

Beijing, Jul 29 (efe-epa).- China’s economy will grow 1.6 percent this year but will expand 7.9 percent next year, according to projections in the latest World Bank report, published Wednesday.

Although the forecast for 2020 will be the smallest growth since 197, growing 7.9 percent in 2021 would signify the fastest pace since 2012, taking into account that the GDP growth rate is measured in year-on-year terms and that in 2011 it had been 9.6 percent.

These forecasts are similar to those from June by the International Monetary Fund (IMF), which forecast a smaller advance for 2020 (of 1 percent), but higher for the following year (8.2 percent).

The World Bank considers economic conditions have changed dramatically since the pandemic began, as both the impact of COVID-19 and the measures to contain it have unleashed a combined shock in demand and supply.

“While supply side constraints have eased, weak domestic and external demand continues to restrain the pace of recovery, despite the measures taken to contain the economic fallout,” the agency said.

The World Bank warned that, apart from a ricochet in economic activity, the growth of household income and the rate of elimination of poverty will slow, with between 8 and 20 million fewer people exceeding that threshold than expected before the pandemic.

“While risks are exceptionally high, they can be partially mitigated by good policies,” said Martin Raiser, World Bank Country Director for China.

He said, Beijing must bet on reorienting the economy towards “more inclusive, sustainable, and greener growth”, because “the pandemic shock has exposed deeply connected economic, social, and environmental fragilities.”

“The recovery offers an opportunity to accelerate progress towards these goals,” the institution’s China representative said.

The World Bank considers two key factors for recovery: The COVID-19 outbreaks which can jeopardize economic activity despite efforts to contain the disease and tensions between China and its trading partners, especially the United States.

The possibility of a prolonged recession worldwide is another risk for the Chinese economy, although everything also depends on the recovery of trust at local and international levels, the report pointed out.

It say Beijing should keep its monetary and financial policies flexible to “provide abundant liquidity and keep market rates and bond yields low, easing the debt burden on households, firms, and governments.”

World Bank chief economist for China Sebastian Eckardt highlights the “need to close gaps in China’s social safety nets both to support distressed workers and households, and to help minimize the lasting weakness of domestic consumption.” EFE-EPA

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