World Bank Warns of Risks to China Outlook

The World Bank cut its 2015 growth forecasts for developing East Asia and China, and warned of “significant” risks from global uncertainties including the potential impact from a strengthening dollar and higher U.S. interest rates.  The Washington-based lender expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.7 percent in each of 2015 and 2016, down from 6.9 percent growth in 2014.

That’s down from its previous forecast in October of 6.9 percent growth this year and 6.8 percent in 2016.  China’s growth is likely to slow due to policies aimed at putting its economy on a more sustainable footing and tackling financial vulnerabilities, the World Bank said in its latest East Asia and Pacific Economic Update report on Monday.

The World Bank said China’s economy is likely to slow to 7.1 percent in 2015 and 7.0 percent in 2016, from 7.4 percent in 2014. The previous forecast was for growth of 7.2 percent in 2015 and 7.1 percent in 2016.  While the impact of low oil prices will vary from country to country, the World Bank said the prospect of a sustained period of low oil costs will help underpin growth in the region, as will an expected improvement in high-income economies.