World Bank cuts 2009 growth projection to 7.5%

The World Bank expects China’s economy to expand by 7.5% in 2009, its slowest rate in nearly two decades, the Financial Times reported. The revised projection, which came in the bank’s quarterly report on the Chinese economy, released on Tuesday, represents a sharp drop on the 9.2% growth predicted just three months ago. Weakness in the property and export markets is seen as responsible for the worsening economic problems, and the bank stressed the importance of rebalancing the economy away from exports and investment toward domestic consumption. It stressed that higher public spending – which is expected to account for 4 percentage points of growth in 2009 compared to 1.5 percentage points last year – should focus on improving living standards rather than just improving infrastructure. More should be spent on health and education as well as on transfer payments to low-income groups, the bank said.