(Yicai Global) April 28 -- China’s economy, the world’s second largest, will expand 8.1 percent this year, according to a report published by the Asian Development Bank today.

That is 0.4 percentage point higher than the ADB’s December forecast for 7.7 percent growth in 2021. Next year, China’s economy is expected to gain 5.5 percent, according to Asian Development Outlook 2021, the regional development bank’s flagship annual economic publication.

“Powered by strong exports and gradual recovery in household consumption, the economy continues to come back robustly despite pandemic uncertainty,” Yolanda Fernandez Lommen, the ADB’s China director, said in a statement to accompany the report’s release.

“The recovery will be driven by improvement in the job market, restored consumer confidence, and the release of pent-up household demand,” she said.

Consumption, followed by investment and exports, should become the main growth contributor once again as the economy picks up, the report said, with the support from exports expected to increase briefly this year before falling back next year.

Growth in services is also expected to revive this year, despite uncertainty over the coronavirus pandemic. The roll out of Covid-19 vaccinations will benefit the hospitality, recreation, and tourism sectors. At the same time, loan growth may slow as banks come up against more restrictions on mortgages and other property related lending, the report said.

China’s current account balance is likely to remain in surplus this year and moderate in 2022, the report said. The authorities should help banks address their bad loans to reduce risk, it added.

Inflation is seen lower this year, as pork prices drop and household demand recovers, and will then pick up next year. Consumer price inflation will slow to 1.5 percent this year from an average of 2.9 percent in 2019, the report said.

Developing economies in Asia are expected to rebound 7.3 percent in 2021 before moderating to 5.3 percent in 2022, it said.

Editor: Tom Litting