World Bank: China on course to grow 8.5% this year

The Chinese economy is on track to grow by 8.5 percent in 2021, up 0.6 percentage point from a previous projection, the World Bank Group said in its latest Global Economic Prospects released on Tuesday.

China's ability to contain the pandemic pretty quickly, its significant policy support, as well as the recent pickup in global trade, help support China's strong recovery, World Bank Prospects Group Director Ayhan Kose told reporters at a press call early on Tuesday.

According to the semiannual report, the global economy is expected to expand 5.6 percent in 2021, up from the 4.1 percent it forecast in January, marking the strongest recovery from a recession in 80 years due to US stimulus spending and faster growth in China but held back by "highly unequal" access to COVID-19 vaccines.

The US growth forecast was bumped up by 3.3 percentage points from January to 6.8 percent in the latest report, its fastest pace since 1984, due to economic support that the bank described as "unprecedented in peacetime."

Despite the recovery, global output will be about 2 percent below pre-pandemic projections by the end of this year, the report showed. Per capita income losses will not be unwound by 2022 for about two-thirds of emerging markets and developing economies.

"This is a tale of two recoveries," World Bank economist Ayhan Kose said, noting that most economies will not return to pre-pandemic levels until 2023 and beyond.

"Globally coordinated efforts are essential to accelerate vaccine distribution and debt relief, particularly for low-income countries," said World Bank Group President David Malpass.

If vaccine distribution to developing countries can be accelerated, Kose said that 2022 global GDP growth, currently forecast at 4.3 percent, could increase substantially to around 5 percent.

The World Bank report also noted risks associated with rising inflation pressures that will add about one percentage point to global inflation in 2021. It said the fall in inflation last year was the "most muted and shortest-lived of any of the five global recessions over the past 50 years."

The increase in inflation since May 2020 has been faster than in previous years. It said that inflation expectations were expected to remain well-anchored, pointing to low and stable inflation in the long term.