China now expected to grow 6.5% in 2009
The new World Bank forecast is in line with that of the IMF; the IMF downgraded their forecast of 2009 Chinese economic growth to 6.7% at the end of January. Although 6.5% is well above zero, and certainly not comparable to the industrialized world's economic growth rates - the World Bank's 2010 growth forecast for high income OECD economies is 2.0%, or 6% below that of China - but it is well below Chinese potential growth.
Chinese growth is expected to improve in 2010, where the World Bank forecast is 8.0%. However, China, like any other country, is subject to diminishing returns to capital investment. Eventually, growth will fall as the economy joins the ranks of the higher income economies, however, that is still decades off.
Originally published at the News N Economics blog and reproduced here with the author’s permission.
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