The World Bank has raised its growth forecast for China, saying stimulus measures and approval of infrastructure projects will help boost growth. It added that the pick-up in factory output and investment suggested that China's economy was bottoming out.
The bank said it now expects China's economy to grow by 8.4% in 2013, up from its earlier projection of 8.1%. A slowdown in China's growth in recent months had prompted policymakers to announce various stimulus measures. These include two interest rate cuts since June and the approval of infrastructure projects worth more than 150bn dollars.
China's central bank, the People's Bank of China, has also lowered the amount of money that banks need to keep in reserve three times in the past few months in an attempt to boost lending.
The impact of easing credit conditions and public investment in infrastructure is beginning to show the bank said in its report. The impact is expected to continue to be felt into 2013, as the authorities have accelerated the approval of large projects.
The bank also raised its forecast for the developing East Asia region, excluding China. The grouping, Thailand, Philippines, Indonesia and Burma, is projected to grow 5.7% in 2013, up from the previous forecast of 5.5%.
The bank said that the region was likely to benefit from Thailand's recovery from last year's floods and strong growth in the Philippines. The Philippines economy has been one of the better performing ones in the region this year. Its growth has been helped by a strong domestic demand, government spending and increased investment in the country.
The bank raised its projection for the Philippines to 6.2% for 2013 from 5%. However the recent deadly and destructive typhoon could impact on the original estimates.
It added that the opening up of Burma and the continuing reforms in the country, which have seen various sanctions against it being lifted, was ”another bright spot in the region”.