WB lifts Chinas 2007 growth forecast to 11.3%
BEIJING: The World Bank (WB) on Wednesday raised its economic growth forecast for China this year to 11.3 percent, while warning its growing trade surplus and inflation were the main threats to healthy growth.
In its latest quarterly update on China's economy, the World Bank raised its growth projection to 11.3 percent from 10.4 percent forecast three months earlier.
Economic growth next year is expected to slow to below 11 percent, it added.
The WB's report said China's economic prospects remained sound, but rebalancing the growth pattern through further fiscal and structural policy measures remained major challenges.
China's soaring trade surplus is adding to excess liquidity and has helped push up asset prices, particularly the stock market, the report said, once again calling for a faster appreciation of the Chinese currency.
"The main macroeconomic task remains to contain the trade surplus, and a stronger real exchange rate is the most obvious tool," said Bert Hofman, the World Bank's lead economist for China. China announced on Tuesday that its trade surplus jumped by 32.82 percent on year in August to 24.97 billion dollars, the second highest in history, bringing the total for the first eight months to 161.76 billion dollars.
The bank also warned that more economic tightening measures were needed as China's inflation, which hit a decade-high of 6.5 percent last month, could move out of the food sector into other areas of the economy.
"While there are no serious demand and price pressures yet, the very strong growth risks eventually outpacing supply," the report said.
"Thus, the authorities are rightly aiming at avoiding excess demand and the spillover of high food prices into generalised inflation, and mopping up liquidity and raising interest rates will continue to be needed."
China's economy grew 11.9 percent in the second quarter of this year and 11.5 percent for the first half. afp
Daily Times - Leading News Resource of Pakistan
