China Exclusive: Firm policy action can beat growth pessimism: World Bank
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E-mail Xinhua, October 21, 2014
Despite a struggle in recovery by the global economy, strong policy action by Asia-Pacific Economic Cooperation (APEC) members can boost confidence and foster growth, World Bank Managing Director Sri Mulyani Indrawati said here on Tuesday.
With the World Bank lowering world growth prospects three times in a row and further cuts in growth forecast, it has not been an optimistic year for the world economy, Indrawati said during an exclusive interview with Xinhua.
"(The year) 2014 has been a disappointing year," she said.
The U.S. economic recovery is proceeding, and U.K. economic growth is encouraging, but growth in Europe is still disappointing, she said prior to the APEC 2014 Finance Ministers' Meeting scheduled to kick off on Wednesday.
"The global growth headwind is stronger than I expected, and policy responses to neutralize the headwind should be much stronger by many policymakers," said Indrawati, also the World Bank's Chief Operating Officer.
"Many emerging economies as well as advanced countries need to deepen and accelerate domestic reforms, as you cannot depend on macro-economic policies as stimulus for your growth," she said, citing developed countries in Europe, Japan, as well as Brazil and other emerging markets where fiscal capacity constraint has become a real issue.
China is in the "new normal" period, as policy makers adjust from an economic growth model reliant on investment to one supported by consumption and higher productivity, which in the short run will weaken the growth performance.
In its latest growth projection released earlier this month, the Washington-based lender lowered China's economic growth rate forecast to 7.4 percent for this year from the previous 7.6 percent. China's growth pace dipped to 7.3 percent in the third quarter from 7.5 percent in the April-June period, official data revealed.
The slowdown of Chinese economy is already impacting global commodity prices, which is affecting resource-exporting countries, Indrawati said.
Changing the levels of Chinese growth should not be interpreted as a weakening growth trend, but as a redesigning of the growth model to make it more inclusive and based more on domestic demand that is sustainable,she said.
"That requires a lot of reforms within China on land, capital as well as labor," she said.
Leaders or representatives of the APEC members will attend the APEC Economic Leaders' Meeting, themed "Shaping the Future through Asia-Pacific Partnership" slated to be held in Beijing on Nov. 10 and 11.
"The meeting came in the middle of the disappointing global growth picture, and can provide confidence in improving global economic growth outlook," she said.
China and other emerging markets are playing an increasingly important role in the world. China, where the meeting is hosted, is in the process of reform, which will deliver a "much stronger message" for the global economy, especially the Asia Pacific economy, to perform well to beat pessimism, she stressed.
Policy makers from APEC members can formulate policies at the macro-level, discuss how to deepen and accelerate reforms and the importance of infrastructure development in many countries to support economic activities and strengthen connectivity across member economies, which is very critical to restore growth confidence, she added.
The 21 APEC members, including the United States, China, Japan and Russia, account for over half of the world's economic output, 40 percent of the world's population, and 46 percent of total global trade. Endi
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