(Yicai Global) June 7 -- The World Bank has raised its forecast for China's economic growth this year to 5.6 percent, as the country’s reopening from the pandemic and excess household savings support consumer spending, particularly on contact-intensive services.

The bank’s latest forecast for China, released yesterday as part of its semi-annual Global Economic Prospects report, is 1.3 percentage point higher than the 4.3 percent prediction it made in January.

Early in March, the Chinese government set a gross domestic product growth target of “about 5 percent” for 2023, one of the lowest in decades. The economy grew 3 percent last year.

“Investment growth is expected to pick up only modestly this year, supported by infrastructure-related stimulus and a gradual recovery in the property sector,” the report by the Washington-based institution said. “Inflation is expected to remain below target due to existing economic slack, including in labor markets.”

But the World Bank also cut its prediction for China's GDP growth next year and in 2025 to 4.6 percent and 4.4 percent, respectively, as the effects of reopening recede, and trimmed the forecast for the East Asia and Pacific region by 0.3 percentage point to 4.6 percent next year.

Global growth will slow to 2.1 percent this year from 3.1 percent last year because the risk of financial stress in emerging markets and developing countries is intensifying amid elevated international interest rates, the bank said. January's forecast for economic growth in 2023 was 1.7 percent.

Growth in the East Asia and Pacific region will likely be 5.5 percent this year, up from the bank’s 4.3 percent projection in January, with the recovery in China offsetting moderating growth in several other economies, it noted.

The World Bank raised its outlook for US economic growth in 2023 to 1.1 percent from 0.5 percent in January. The figure for 2024 was halved to 0.8 percent.

Editor: Futura Costaglione