New World Bank China GDP Growth Forecast: 8.4%

Posted by: Frederik Balfour on November 4, 2009

The World Bank raised its forecast for China’s GDP growth in 2009 to 8.4%, providing yet more evidence that the Chinese economy is in full recovery mode. Six months ago when China’s exports were plunging and Beijing’s $586 billion stimulus package had not yet kicked in the World Bank projected this year’s growth at just 6.5%. Its forecast for 8.7% growth in 2010 remains unchanged.

For close followers of China’s monthly economic indicators, the upgrade should come as no big surprise. China’s Purchasing Managers Index, or PMI, issued by the China Federation of Logistics & Purchasing with the support of the National Bureau of Statistics, has been indicating recovery for several months. The latest PMI figures released on November 2, showed that economic expansion is gathering force, showing a figure of 55.2 in October, its highest level since April 2008 when economic growth was nearly red-lining. The index, which reflects manufacturer’s orders, indicated an expansion for the eighth month in a row.

That’s welcome news for China’s neighbors. Their economies have become increasingly tethered to China’s in recent years, supplying the mainland with components and raw materials used as inputs into its monstrous manufacturing industry. Exports from those countries initially plunged along with China’s as U.S. and European consumers went into thrift mode, but the growth in Chinese domestic demand has helped offset that decline somewhat thanks to China’s pump priming and a huge turnaround in new residential property construction.

Here’s how the World Bank describes China’s recovery: “Most of the stimulus has shown up in infrastructure-oriented government-led investment. But some has been consumption-oriented and domestic demand growth has been broad based. Resurgent housing sales have started to feed through to construction activity. Investment in manufacturing is affected by spare capacity, but consumption has held up well.”

The authors of the report note that one of the big challenges facing the Chinese economy is to achieve more balanced growth. This is a major theme in Stephen Roach’s book “The Next Asia” China which I reviewed for BusinessWeek magazine in which Chinese consumers need to save less.

The World Bank East Asia and Pacific Update, which is published twice a year, also painted a brighter picture for Indonesia, which is expected to grow 4.3% this year as against a previous estimate of 3.4%. Estimates of 5.5% growth for Vietnam, and a 2.7% contraction for Thailand remained unchanged.

Singapore’s economy, one of the worst hit in Asia earlier this year by the global downturn, has catapulted its way out of recession, clocking a 14.9% quarter-on-quarter annualized growth in the third quarter. Year-on-year growth was 0.8%, compared with a contraction of 9.6 % and 3.2% in the first and second quarters. For more on this check Bruce Einhorn’s BusinessWeek magazine article “Singapore’s Economy Begins to Stir”.

Reader Comments

rob

November 4, 2009 9:35 AM

This is totally wrong. The World Bank revised India's GDP growth numbers to 8.4% not China's. India is the world's largest democracy and we will emerge the only super power of the world, not China. Jai Hind!

Herbert Ding

November 4, 2009 10:01 AM

I totally agree with you Rob! You are the man! Business Week should leave us along, no more news about China, please let us happily rotten in peace.

meyo

November 4, 2009 11:51 AM

Rob and Herbert, you both are so naive..go home. kids..

Irritated Indian American

November 4, 2009 1:31 PM

Rob, I'm an Indian American and I'm telling you to shut up.

Stop talking with an India vs. China mindset. India may be "the world's largest democracy" but it's also heavily corrupt. Also, all the facts on the ground show China with the economy that is 3x bigger than India's. And it's also a fact that the World Bank has set China's GDP to grow at 8.4%. If you think that's wrong, then CITE your source; don't just be a retard and post whatever you wish was true, but is a lie.

It's seriously super annoying to see the Indian people or other people "pretending to be Indian," post and bring the whole India vs. China thing in here. India needs to learn from the rest of the world how to do what it does badly, better, instead of complaining and being jealous of China.

C. H. Ng

November 4, 2009 8:48 PM

There are always many comments posted whenever China's issues are mentioned. Some are good, some are silly but a few are outright damned stupid or should I say, like a kind of psychopathic reaction where he/she just cannot see the word "China" is mentioned.

I think most readers here would agreed with me and can probably guess who are these "sicked" people. So I hope BW should ban their comments from being posted here.

D Tao

November 4, 2009 11:21 PM

India is not competing against China; it's competing against itself. Same with China. I'm from China and am happy to see both countries doing well.
After all, the well being of people are not measured by GDP, but how happy they are. I think both China and India have a long way to go.

Shunjing

November 5, 2009 7:54 AM

Rob aka Bob is Pretending to be Indian. I think he is a tibetan or a Uyghur.

Rob

November 5, 2009 12:55 PM

rob the Hindu is here. We high caste Hindus cannot be compared to the Tibetans. They are more appropriate for the Dalits.

C. H. Ng

November 6, 2009 1:01 AM

Oh..oh...so now a "high caste Indian" cannot be compared with the Tibetan? How come? Because your head got 2 horns whereas nobody has?
And btw who makes you or what defined you a "high caste" person? God? No way!! It's only the stupid mindset of your Indian people who foolishly allowed the people to be divided by caste (or class). Once out of your country, you are just an ordinary person. Nobody would be bothered to know or care what caste or class you are.

The Surviving Dalit

November 7, 2009 1:08 AM

The caste system is pure evil. We have to let the world know, before we are totally killed off.

Saikat Das

November 7, 2009 5:40 AM

what a bloody bullshit the Rob is...

Brett

November 9, 2009 12:43 PM

To Rob,

You're so funny, a s&*t disturber.
Hows your heart, disturbed by all these good news
coming out of China. Bothered by China still standing
strong not collapsing.

How's India doing with her Commonwealth game, I
heard they are behind schedule, might not be able to
meet the deadlines. For other participants sake I
hope not, don't want to be another failed project like
your Moon mission.

Dipu

November 18, 2009 1:46 AM

Please ignore Rob. He has the mindset of a 2 year old. I hope someday he would learn "humility and compassion" from the Tibetan Buddhists.

mantaurus04

January 2, 2010 4:13 AM

china and india should remain friends to each other. in fact they should become closer as they develop as it is to their best interests.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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