World Bank Cuts China 2012 Export Growth to 8.2%

China’s economic growth may slide to a 13-year low in 2012 as a sluggish world recovery damps export demand and domestic investment and consumption growth decelerate, the World Bank’s latest forecast shows.

The Washington-based lender cut its estimate for China’s expansion this year to 8.2 percent in a report released on 11 April in Beijing from a January projection of 8.4 percent.

The world’s second-largest economy lost additional steam in the first quarter, with a report by the statistics bureau likely to show expansion was the smallest in almost three years, according to a News survey. The slowdown underscores the risks to the global recovery after the U.S. reported March job growth that trailed estimates and concern mounted that Europe’s sovereign debt crisis is worsening.

Premier Wen Jiabao this month pledged to boost infrastructure investment, ensure “reasonable” liquidity and accelerate payments of export rebates amid cooling domestic and overseas demand last quarter. The central bank has lowered banks’ reserve ratios twice since November and a Bloomberg survey last month showed economists forecast more reductions this year.

‘Mild Recovery’

A pickup in world trade next year may help drive a “mild recovery” in China’s expansion, the World Bank said, raising its 2013 growth forecast to 8.6 percent from a January estimate of 8.3 percent.

China’s trade surplus may drop to 3.1 percent of gross domestic product this year from 3.4 percent in 2011 while the current account excess will rise to 3 percent from 2.8 percent, according to the World Bank’s projections. China posted the largest trade deficit since at least 1989 in February as exports grew less than forecast and imports surged.

The shrinking trade surplus will result in a slower accumulation of foreign-exchange reserves and the Chinese currency will appreciate at a slower pace as long as the weak external environment weighs on export volumes and prices, the World Bank said.

Inflation in the nation this year will average 3.2 percent as growth slows, commodity-price “impulses” fade and the property market cools further, the report estimated.