World Bank cuts China's growth forecast
18-03-2009
The World Bank has cut its forecast of China's 2009 growth from 7.5 percent to 6.5 percent, but expressed confidence in Beijing's ability to keep the economy expanding amid the global turmoil. The recent plunge in the mainland's trade will hurt investment and job creation, the bank said in its quarterly report. However, it added that China still should grow faster than other major countries due to its huge stimulus package and strong banks, which were unhurt by the global crisis. "China's exports have been hit badly, affecting market-based investment and sentiment, notably in the manufacturing sector," the report said. That would lead to "weaker market-based investment, less job growth" and downward pressure on prices, it said, forcing companies to cut wages and investment. Premier Wen Jiabao said last week China should meet its official eight percent growth target, despite a 25.7 percent drop in exports in February. Growth forecasts by private sector economists range from eight percent to as low as five percent - the strongest of any major country - but a sharp drop from a stunning 13 percent expansion in 2007. Beijing still has "plenty of space to implement forceful stimulus measures," with more spending and interest rate cuts, the report said.
