ANKARA
The World Bank on Wednesday forecast China’s economy to grow 7.9% in 2021 despite a slowdown linked to the COVID-19 pandemic.
In a report titled From Recovery to Rebalancing, however, the World Bank said Beijing would need to avoid any “significant contraction” in fiscal policy next year to keep its post-pandemic economic recovery on track.
“The global environment remains very uncertain and this requires an adaptive policy framework. Premature exit from politics and excessive tightening could derail the recovery, ”said Martin Raiser, World Bank country director for China.
“The withdrawal of budget support should be gradual, but the focus should shift from traditional infrastructure to more social spending and green investments.”
The report predicts that China’s GDP growth will slow to 2% in the current fiscal year, from 6.1%, but will pick up next fiscal year as confidence in consumer spending and business investment strengthened in addition to improving business profits, labor market conditions and incomes.
Beijing had announced various stimulus measures, including the issuance of special treasury bills, lower borrowing rates and tax exemptions, to recover the world’s second-largest economy from the COVID-19 pandemic.
“China has normalized faster than expected, aided by an effective pandemic strategy, strong policy measures and dynamic exports,” the latest economic update on China said.
The biggest risk to China’s economic outlook remains a resurgence of the coronavirus.
“Consumer and business confidence has improved”
The report observed that consumer and business confidence in China has increased and labor market conditions have improved.
Chinese government customs data showed the country’s exports are on the rise, reaching record levels last month.
The World Bank also urged China to strengthen its “still fragile private demand” and adopt “market-oriented structural reforms.”
China was the first country to report an economic recovery amid the COVID-19 pandemic. The first case of the deadly coronavirus was reported in the central city of Wuhan in China in December last year and since then it has spread worldwide with more than 78 million people catching the virus, including 1 , 7 million deaths. But China has said it won against the virus and has returned to normal life.
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