World Bank increases China's GDP growth to 7.2% this year

The World Bank expects GDP to increase by 7.2% this year. Click here to view all financial news pictures yesterday, the World Bank released its latest issue of China's economic Quarterly, raising its 2009 GDP growth forecast to 7.2%.　　The agency stressed that China will still have impressive economic growth this year and next, but it is premature to say that the economy is beginning to recover sustainably. Short-term Neinian back to 10% high growth The bank reports that government-influenced investments will strongly support 2009-year growth.　　About 6% of the growth rate of 7.2% per cent is expected to come from government-influenced spending and the stimulus from lower taxes. But Ardo, China's chief economist at the World Bank, said that as China's real economy is already largely integrated into the world economy, there is a limit to how fast growth in China relies on government spending to keep growing at a low global growth slump. At the same time, market investment is expected to be sluggish for some time because of overcapacity in many manufacturing sectors and squeezed corporate profit margins. The outlook for the real estate industry looks good, but consumption growth is unlikely to accelerate quickly.　　Overall, before the world economy recovers, China's economy is unlikely to return to its rapid growth of nearly 10% per cent.　　There is no need for additional fiscal stimulus. According to the agency's forecasts of economic trends, it may not be necessary or appropriate for China to add additional large-scale policy stimulus in 2009. On the one hand, while the growth rate may not meet the government's targets this year, China's economic growth, buoyed by strong stimulus measures, is likely to remain high, given the current global environment, and China is probably able to avoid vicious deflation or other major problems caused by the downturn.　　Moreover, given the uncertainties surrounding the global economic recovery, it is best to leave room for fiscal stimulus for 2010. Annual deficit or 5% of GDP on current trends, China's 2009-year fiscal deficit is likely to be much higher than the budget.　　2009 budget plan revenue growth 8%, expenditure growth 22%. While it is difficult to predict fiscal revenues at the moment, the bank forecasts a 5% drop in revenues this year, according to the agency's forecasts of economic trends and a rough estimate of its annual impact on policies.　　The assumption that spending will grow by 22% per cent this year, in line with the budget, means that the annual deficit would be almost 5% of GDP. The bank stressed that there was considerable uncertainty about these forecasts. China's fiscal position is good enough to cope with the rising deficit.　　However, the analysis highlights the possibility of a 2010-year reduction in policy space if new stimulus measures are added in 2009. There is no way to get into deflation. In this context, deflation is unlikely in China, based on the low risk of vicious deflation worldwide.　　But it must be noted that this pressure will persist. The bank noted that the risk of deflation could be reduced by taking some measures, including:The right time to raise the prices of some of the administrative pricing commodities; and to curb overinvestment in certain sectors, which have performed well in traditional growth models, may become poorer in the future due to changes in demand structures and relative prices. At the same time, while there are concerns that the rapid growth in money and credit will lead to inflation, there are a lot of excess capacity in China and around the world that is putting downward pressure on product prices and raw material prices will not rise sharply in the short term, so the overall price level is unlikely to increase sharply in the near future