Global Times - ADB predicts China’s 2009 growth rate at 8.2%

ADB predicts China’s 2009 growth rate at 8.2%

Source: Global Times
[14:51 September 22 2009]
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Economic growth in China is expected to quicken in 2009 and 2010, said a major new report from the Asian Development Bank (ADB), while it also forecasted 3 percent inflation next year.

The Asian Development Outlook 2009 Update (ADO Update) released today, projects the country’s economic growth to reach 8.2 percent this year, with a surge in bank lending and fixed asset investments pushing growth 1.2 percentage points higher than ADB’s forecast in March.

The report expects the central government’s fiscal stimulus to be maintained and a moderate recovery in the international economy in 2010 will lift China’s growth rate next year to 8.9 percent.

“The massive fiscal stimulus announced last year and the aggressive monetary easing in 2009 has softened the blow of the global slump on the economy,” said Jong-wha Lee, ADB’s chief economist. “The 8 percent growth target for 2009 set by the government at the start of the year now looks within reach for developing Asia’s largest economy and, in 2010, it will be in sight of the country's long-run sustainable growth range of about 9 percent.”

The ADO Update expects mild deflation to continue through the rest of this year, but higher economic growth in 2010 will contribute to inflation rising to a projected 3 percent.

Despite a notable slowdown in the region’s economic expansion relative to potential, developing Asian countries are leading the recovery from the global downturn, the report said.

However, the report notes the main risks to the outlook for Asian nascent growth is a significantly weaker recovery in the international economy than currently foreseen, and, on the domestic front, an earlier than expected exit from the government’s fiscal stimulus package, and concerns that the flood of bank lending, if maintained for too long, could trigger another round of severe monetary policy tightening that would pull growth down again.

The Asian Development Outlook, and Asian Development Outlook Update, are ADB’s flagship economic reports that analyze the economic conditions and prospects in Asia and the Pacific, and are issued in March and September.

Zuo Xuan and Wu Fan contributed to this story