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Chinese revival may start this year: World Bank news
09 April 2009

The World Bank expects the Chinese economy to enter the road to recovery around the middle of this year, and provide a much needed fillip to other developing economies of Asia to counter the worst financial turmoil in more than a decade.

The semi-annual report of the Washington-based lender released on Tuesday estimated a 6.5-per cent growth this year for the Chinese economy - the world's third largest - down from the 13 per cent achieved in 2007 and 9 per cent in 2008.

Developing East Asian economies, (which include China, Indonesia, the Philippines, Thailand, Vietnam, Cambodia, Laos, Mongolia, Papua New Guinea and the island economies of the Pacific excluding Japan, South Korea, Hong Kong, Taiwan and Singapore) are projected to grow at 5.3 per cent this year, a downward revision from the 6.7 estimated in December and significantly lower than the 8 per cent growth attained last year and 11.4 per cent in 2007.
 
The World Bank said, "a ray of hope may be emerging with signs of China's economy bottoming out by mid-2009''.

A resurgence in China - "a bright spot in the region and the global economy" - is likely to begin this year and hit full stride in 2010, potentially contributing to regional stabilization and perhaps recovery.
 
With the huge stimulus package of 4 trillion yuan ($585 billion) announced last November, China is planning to reduce its dependence of trade and pump more money into the economy through higher public works in hopes of boosting consumption and consumer confidence.

China had also scrapped lending quotas to thaw liquidity and increased tax rebates to arrest a slump in exports.

Chinese premier Wen Jiabao said last month the government was ready to expand its stimulus if the impact of the global crisis worsens. He said China has "reserved adequate ammunition," though he gave no details.

The Chinese government is targeting what it calls a "challenging but manageable" 8 per cent growth in 2009.

China's Purchasing Managers Index rose for the first time in six months in March, signaling growth in manufacturing sector.

Vikram Nehru, the World Bank's chief economist for East Asia, says the China's economic indicators in recent months have been good, and if sustained they will ripple through the region.
 
"Purchases of inputs have soared, even consumer confidence is up and of course everybody knows bank lending has accelerated quite significantly. It's just a question of time before the implications begin to show in imports from East Asian countries.'' Nehru said.

China, being a key customer for other countries in the region, by improving its economic health can provide an impetus to those countries to emerge from the crisis.

However, the Bank warned the economic situation remains a daunting challenge, with a global recovery resting on major developed economies of the world which take most of Asia's exports and recovery there isn't expected until 2010.

Nevertheless, the region is still the fastest growing part of the world economy, the Bank said.

In the next few years, Asian economies need to develop domestic demand, boost competitiveness, penetrate new markets and attract foreign investment to return to the high growth rates of the past, the report said.

The World Bank said the global economy may shrink for the first time since World War II, and the World Trade Organisation estimated 9 per cent drop in global trade this year.


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Chinese revival may start this year: World Bank