China's Economic Upsurge to 'Cushion' Global Slump: World Bank

10 January 2008

WASHINGTON, DC: The world's established economies are the most likely to suffer sharp deceleration in economic growth in 2008, predicts the US-headquartered World Bank.

But the landing will be softer than might otherwise have been the case, thanks to China's still-burgeoning economy.

The bank expects annual world economic growth to slow from last year's 3.6% to 3.3% in 2008.

And it warns that the 7.1% average growth predicted for the major developing nations could easily be derailed by the overheating of their economies or further upheavals in the global financial sector.

US growth is forecast to slow sharply to just 1% in the year's first half, but recover quickly by 2009. And all the major industrialised nations are expected to grow by 2.2% this year, down approximately 0.5% on 2007.

China, on the other hand, is expected to grow by more than 10% over the next two years, with India breathing down its neck.

Much hangs on whether these two emerging economic giants meet the bank's predictions. Failure to do so could drag down the aggregated growth of the two Asian tigers from around 10% to just 5.5%.

Much still hinges on the health of the US economy. Warns the World Bank's Uri Dadush: "A sharper US slowdown is a real risk that could weaken medium-term prospects in developing countries."

Data sourced from BBC Online (UK); additional content by WARC staff