| World Bank cuts 2008 China growth forecast to 9.4% |
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| Wednesday,April 02,2008 Posted: 22:57 BJT(57 GMT) |
| From:www.chinaview.cn Article type:Reproduced |
The World Bank (WB) cut its forecast for China's 2008 economic growth to 9.4 percent in a report released on Tuesday.
In February, it forecast 9.6 percent, down from the 10.8 percent prediction made in mid 2007.
Louis Kuijs, senior economist of the World Bank's Beijing office, said the latest adjustment was made purely out of concerns over external factors of the Chinese economy.
As the world economy had slowed more rapidly in the past two months, this had a negative impact on the growth of Chinese exports, he explained.
The bank also attributed its previous forecast revision in February to slowing external demand.
Kuijs said he was still optimistic about the domestic performance of the Chinese economy and was confident of expected powerful investment and robust consumption domestically.
The latest WB report said despite falling U.S. import growth and rising volatility in global financial markets, China was expected to continue to perform strongly on rising domestic investment and consumption growth.
The latest forecast represented a big markdown from China's growth of 11.4 percent in 2007, the highest increase in 13 years and also the fifth year of double-digit growth.
The U.S. economic slowdown, as well as its impact on the world economy, the soaring international prices for energy, industrial materials and agricultural products, and the country's increasing inflation pressure were key challenges faced by the Chinese economy, Kuijs said.
The WB report, "East Asia and Pacific Update", is a six-month review of the region's economies.
It also said that growth in developing East Asia would fall by around 1 to 2 percentage points to around 8.5 percent in 2008 as a result of the unfolding financial turmoil in the United States and the resulting global slowdown.
Economies in the region, defined as comprising all low- and middle-income economies in East Asia, such as China, Indonesia and Malaysia, reported a combined 10.2 percent growth in 2007, the highest in a decade.
According to the report, East Asia, especially China, has increasingly become a "growth pole" in the world economy, acting as a counterweight to the slowing industrial economies.
"The overall growth remains healthy across the East Asia and Pacific region," the bank said.
Most countries were well positioned to navigate the global slowdown on back of the investments they had made over the past 10years in structural reforms and putting sound macroeconomic policies in place, it added.
It warned the real challenge for governments in the region was the inflationary effect of mounting food and fuel prices, especially the harsh burden imposed on the poor.
"Dealing with high food and fuel prices probably constitutes a greater challenge to governments in East Asia than the financial turmoil in the United States and a slowing global economy," the bank said in the report.
"In virtually every East Asian country, inflation is climbing to uncomfortable levels."
In China, the inflation rate, as gauged by the consumer price index (CPI), began to climb in the second half of last year on soaring food prices, especially in pork. The trend has continued into this year.
The country's CPI reached 8.7 percent in February, the biggest jump in nearly 12 years.
China has set "the prevention of an overheating economy and (is) guarding against a shift from structural price rises to evident inflation" as this year's top priorities for macro economic controls.
The government said last month that it aimed to maintain economic growth at 8 percent this year, while the inflation target was fixed at 4.8 percent.
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