The World Bank’s new “East Asia and Pacific Economic Update” forecasts that China’s GDP growth will only be 8.2% in 2012 which is a substantial come down for a nation which has grown at or near 10% a year for a decade. The report blames the usually suspects.
A collapse of EU economies will hurt China’s export business. Monetary and bank regulation policies by the People’s Republic can only do so much to offset this. There are a few good by-products of the slowdown. The first is that China’s insatiable appetite for commodities, which include oil, will lessen. That should cap any inflation in commodities prices, which has hurt weaker nations around the world.
The other bit of good news is that the forecast is not lower. Many analysts believe that China will have a “hard landing” caused by a sharp decline in exports and a collapse of residential and commercial property values. There is barely a hint of that in the World Bank’s report.
Douglas A. McIntyre
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