World Bank Raises China’s GDP Growth Forecast

China’s massive expansionary fiscal and monetary policies should keep the world’s third-largest economy growing at a respectable rate this year and next, the World Bank said on Thursday.

In a quarterly update, the bank raised its forecast for [GDP] growth this year to 7.2 per cent, still below Beijing’s official target of 8.0 per cent but up from the 6.5 per cent it projected in March.

Growth in 2010 was likely to be just a bit stronger, at 7.7 per cent, the report said.

The bank expects China’s foreign exchange reserves to grow by $218 billion this year, the smallest increase since 2005, after leaping by $419 billion in 2008 and $462 billion in 2007.

That is largely because the bank is now forecasting a whopping capital account deficit of $170 billion this year, driven by a variety of financial outflows… [gulfnews]

While China’s foreign exchange reserve accumulation has slowed, its reserves were $1.95 trillion at the end of q1’09, the world’s largest stockpile.

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