World Bank revises China growth projection to 8.4%

The World Bank has revised its 2009 economic growth forecast for China to 8.4%, up from the projection of 7.2% made in June, on the back of huge public spending, AFP reported. While the infrastructure investment has been the key contributor to growth, the World Bank noted that consumption has held up well and real estate activity has begun to recover. China’s economy grew 6.1% in the first quarter of 2009, but recovered to 7.9% in the second quarter and 8.9% in the third. The World Bank expects GDP growth of 8.7% in 2010, with public spending likely to slow while exports and real estate investment pick up. However, it said that sustainable growth depends on “more emphasis on consumption and services and less on investment and industry.” The bank also expressed concerns about asset price bubbles in equities and property in China and elsewhere in the region. Inflationary pressures could force a tightening in monetary policy “sooner rather than later.”