China’s economy will expand by at least 7 percent for the next two years, the Asian Development Bank (ADB) said on Tuesday, taking a more upbeat stance on the growth prospects than even Beijing itself.
In its annual Asian Development Outlook report, the ADB predicted that the world’s second largest economy will expand by 7.2 percent this year and 7 percent in 2016, compared with the 7.4 percent pace recorded in 2014, Financial Times reported.
“[Despite] a shrinking working-age population and rising labor costs, the [Chinese] economy can continue to deliver solid growth as long as the government makes steady progress on its reform agenda,” ADB chief economist Shang-jin Wei was quoted as saying.
“Reducing the dominance of state-owned banks and liberalizing interest rates while preserving financial stability is a key element of the reform package,” he noted.
China’s economy grew at its weakest pace for a quarter of a century last year and leaders have warned of a “new normal” of slower growth.
At the recently concluded annual session of China’s parliament, Premier Li Keqiang predicted economic growth of “about 7 per cent” this year.
The ADB was also optimistic about India’s prospects, projecting the nation’s GDP growth at 7.8 percent for the year to March 2016, and 8.2 percent in the following fiscal year.
The bank said risks to its optimistic regional outlook include a sharp run-up in domestic debts.
“Although debt remains at manageable levels, policy makers must carefully attend to credit growth to ensure the maintenance of sound financial systems that are efficient, well-regulated and inclusive,” the ADB said in its report.
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