Monday, November 29, 1999

W.Bank sees China growth easing, outlook still rosy

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China's economic prospects remain favourable and a wage-price spiral is unlikely despite a recent spate of big pay increases, the World Bank said on Friday.In a quarterly update, the bank said growth was likely to slow after a strong start to the year as last year's super-loose macro policy stance moves back towards normal.Steps to cool the real estate sector as well as headwinds from Europe would also cause a "more pronounced" deceleration in growth than the bank had been expecting.Still, it kept its forecast for 2010 gross domestic product growth unchanged at 9.5 percent and pencilled in 8.5 percent for 2011.That is a touch lower than the 8.7 percent forecast in the bank's previous update in March but is the same as the projection contained in the World Bank's Global Economic Prospects publication issued on June 10.Risks to the growth forecast are two-way and balanced, Friday's report said."Domestically, the dynamics between economic developments and policy responses imply substantial risks and uncertainties, amplified by the types of instruments used, including with regard to the real estate sector."But, overall growth prospects remain solid and much less uncertain than a year ago," the bank said.It said the risks related to rapidly rising housing prices had subsided because of recent property tightening measures."Nonetheless, probably the most serious macroeconomic and financial risks are still those stemming from the monetary stimulus, including underlying pressure on asset prices, strains on local government finances and non-performing loans," it said.(Reporting by Alan Wheatley; Editing by Chris Lewis)
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