World Bank sees China’s GDP growth at 6.5% in 2009

07 April 2009 10:02  [Source: ICIS news]

SINGAPORE (ICIS news)--The World Bank expects China’s economy to slow its growth to 6.5% this year – just half of the rapid pace registered two years ago – as it, like the rest of Asia, will fail to escape the exports slump amid the global recession, according to a report from the multilateral institution released on Tuesday.

However, in its report titled “Battling the Forces of Global Recession”, the World Bank said China will remain the fastest growing economy among the 11 developing economies in east Asia.

East Asia’s GDP growth will significantly slow to 5.3% this year from an 11.4% clip registered in 2007, with the economies of Malaysia and Thailand shrinking by 1.0% and 2.7% year on year respectively, the report said.

Vietnam will grow at 5.5%, while Indonesia will just manage a 3.4% growth and the Philippines is forecast to post a 1.9% expansion, according to the report.

“There is no doubt that the east Asia and Pacific region is confronting very difficult times,” said Vikram Nehru, regional chief economist at the World Bank, in a statement.

But thanks to the massive fiscal stimulus package implemented in China, there are signs that it is “beginning to turn the corner”, it said.

China’s five straight years of double-digit growth were cut short in 2008, when the full-blown financial crisis hit in the latter part of the year.

“A return to stronger economic expansion in China next year should help support growth among the countries of the east Asia and Pacific region, but a sustainable recovery will ultimately depend on developments in the advanced economies,” it said.

East Asia is in good stead to benefit from the resumption of global growth but it may not repeat its success over the last decade given weakness in the US and Europe, the World Bank said.

“The pressure to increase savings in east Asia’s key export markets is likely to constrain their growth over the medium term,” it said.

“The risks to the outlook are weighted heavily on the downside. Continued banking problems or even new waves of tension in financial markets could lead to stagnation in global GDP or another year of declining GDP,” the World Bank said.

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