19 Mar 2009

World Bank lowers China forecast

5:23 am on 19 March 2009

The World Bank has cut its prediction for China's economic growth this year from 7.5% to 6.5%.

The agency says China cannot "escape the impact of global weakness".

The BBC reports falling demand for Chinese goods abroad is seen as the main reason for the cut.

But the bank says China's economy is still holding up well compared to other countries, and remained a bright spot amid all the financial gloom.

The World Bank expects between 16 million and 17 million non-farm jobs to disappear this year, but said the key to avoiding instability was an effective social welfare system.

The government has said it is prepared to offer more stimulus spending in order to achieve the 8% growth target. But the bank said this may not be the right approach and the government should nurture reserves in case growth falls further.

According to the latest World Bank global forecasts, published in December, the world economy is set to expand at a weak annual rate of 0.9% in 2009, with a 0.1% contraction in developed economies offset by growth in developing countries of 4.5%.

A Chinese government think tank this month forecast first-quarter growth would slow to 6.5%, from a 6.8% pace in the fourth quarter last year.