World Bank cuts China GDP forecast for second time

The World Bank cut its forecast for China’s gross domestic product growth for the second time in four months, predicting that the Chinese economy would expand by only 6.5% in 2009, its weakest performance since 1990, Reuters reported. In its China Quarterly Update, released Wednesday, the World Bank warned that a 6.5% growth rate will likely weaken investment and job growth and impose downward pressure on prices in the coming years. The Bank welcomed the inclusion of steps to boost consumption in the government’s US$585 billion stimulus package since over-reliance on capital-intensive investment could damage the pace of job creation and the quality of growth. It said there was room for a further shift towards consumption and for less emphasis on capital spending in order to rebalance the economy so that growth is more sustainable economically, socially and environmentally.