BEIJING (AP) — China’s rapid growth should slow to 8.5 percent this year from 10 percent in 2010 but the world’s second-largest economy will remain the focus of Asia’s expansion, the World Bank said Thursday.
In a report on the global outlook, the bank said overall growth for developing Asian economies should ease to 8 percent from last year’s 9.3 percent as exports moderate and governments rein in credit to cool inflation pressures.
China’s growth is easing as Beijing winds down its stimulus and tightens credit to cool inflation and surging housing prices, the bank said. Still, it said continued strong Chinese demand for raw materials and components should buoy exports by its Asian neighbors.
“East Asia is well positioned to enjoy further years of strong — albeit more moderate — growth over the period to 2012,” the Washington-based bank said. “China will remain the focal point of regional activity.”
The bank’s forecasts for developing economies in East Asia and the Pacific include China, Indonesia, Thailand, Vietnam, the Philippines, Malaysia and Pacific Island nations Fiji and Vanuatu.
Many economies are trying to rein in high or rising inflation, with hikes in food prices especially acute, the bank said. It said prices of staple foods might climb further if investors start buying more commodities in hopes of earning higher returns at a time of low interest rates in the West.
“The pickup of inflation in China is tied in large part to higher food prices; and for a number of countries, import bills would escalate substantially,” the bank said.
China’s inflation surged to a 28-month high in November of 5.1 percent, driven by an 11.7 percent jump in food costs that analysts blamed on a flood of bank lending. Beijing has hiked interest rates twice in the past four months and tightened investment curbs to keep inflation from spreading to other parts of the economy.
China’s growth has slowed as Beijing tries to steer it to a more manageable level. The expansion eased to 9.6 percent in the three months ending in September from a stimulus-fueled post-crisis high of 11.9 percent in the first quarter.
Regionwide, exports should expand by 12 percent in 2011-12, down slightly from 15 percent during the boom, the bank said.
Indonesia’s 2011 growth should accelerate to 6.2 percent from last year’s 5.9 percent, the bank said. It warned that Thailand’s expansion should slow sharply, falling to 3.2 percent from 2010’s rapid 7.5 percent.
Vietnam’s growth should moderate to 6.5 percent from last year’s 6.7 percent, the bank said.