HONG KONG, Sept. 22-- The Asian Development Bank on Tuesday raised its forecast for China's economic growth in 2009 to8.2 percent, from its previous forecast of 7.0 percent contained the Asian Development Outlook 2009 released in March.
Unveiling the Asian Development Outlook 2009 Update in Hong Kong, Asian Development Bank (ADB) Chief Economist Jong-Wha Lee said the bank also lifted the growth forecast for developing Asia's largest economy in 2010 to 8.9 percent from 8.0 percent.
"The 8 percent growth target for 2009 set by the (Chinese) government at the start of year now looks within reach ... and, in 2010, it will be in sight of the country's long-run sustainable growth range of about nine percent," Lee told reporters.
The surge in bank lending and fixed asset investments pushed the growth forecast for China in 2009 by 1.2 percentage points, Lee said.
The Chinese economy grew by 7.1 percent in the first half of 2009, driven by investment and consumption, which contributed 6.2 and 3.8 percentage points of the growth, respectively. These were offset by a 2.9 percentage points decline contributed by net exports, according the report.
Fixed asset investment in real terms soared 41.2 percent in the second quarter. Investments in agriculture and infrastructure, and public funding for projects related to health and social security all rose sharply, it said.
Industrial production regained momentum in the second quarter on restocking, the report said. But weak external demand and overcapacity in industries such as steel, cement and machinery pushed the total profits of enterprises down by 22.5 percent in the first five months.
The major drivers of growth in 2010 will be infrastructure investment, construction and the expansion of consumption. Net exports were expected to make only a minor contribution, as only a moderate recovery was forecast for the world economy.
ADB said it expected mild deflation to continue in China through most of this year, but that higher economic growth in 2010 would contribute to inflation, which was forecast to rise to three percent.
The Asia Development Outlook is the flagship publication of the Manila-based Asian Development Bank. The updated version of the report projected a growth of 3.9 percent for developing Asia in 2009, compared with the previous forecast of 3.4 percent.