World Bank raises China growth forecast to 7.2% in 2009

18 June 2009 11:44  [Source: ICIS news]

SINGAPORE (ICIS news)--China's heavy fiscal spending this year is forecast to lead to an economic growth rate of 7.2%, up from an earlier forecast of 6.5%, the World Bank said in a report released on Thursday.

There would be little improvement next year when the economy is projected to post 7.7% growth, the World Bank said in its quarterly report on China.

“Growth in China should remain respectable this year and next, although it is too early to say a robust sustained recovery is on the way,” said Ardo Hansson, World Bank lead economist for China.

The government has started to implement a yuan (CNY) 4,000bn ($585bn) fiscal stimulus package this year to ensure funding of infrastructure projects to boost China’s slowing economy.

“Government-influenced investment will strongly support growth in 2009. However, there are limits to how much and how long China’s growth can diverge from global growth based on government-influenced spending,” said Hansson.

China reeled from the sharp slump in global demand given its strong export ties with the US and Europe, but the government was maintaining its target of 8.0% growth this year, down from 9% last year.

Based on the World Bank’s assessment, the economy is unlikely to rebound to high single-digit growth rates before the global economy recovers.

($1 = CNY6.84)

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