China’s growth outlook revised higher by World Bank

The World Bank today released its latest quarterly update on the Chinese economy and said that China’s GDP will likely exceed the previous bank estimates. China’s GDP registered a 10.6% growth rate in the first half of the 2010 and was followed by a 9.6% growth rate in the third quarter, despite diminishing effects and the phasing out of the government stimulus program.

Looking forward for the Chinese economy, Louis Kuijs, Senior Economist and main author of the quarterly report says, “We have edged up our GDP growth projection for 2010 to 10 percent after the third quarter data. We see growth at 8.7 percent in 2011 and easing somewhat further in the medium term.”

The previous quarterly update published in June had projected a GDP rise of 9.5% for all of 2010 and an 8.5% advance for 2011.

Exports continued to be a main driver of the Chinese growth as merchandise export volumes are higher by 9.6% in the third quarter from the 2008 third quarter level, according to the report.

Other Highlights:

• The bank’s inflation outlook sees the inflation rate above 3% for the time being as food prices push higher.

• The trade surplus with the US is trending higher again after falling in 2009 as government stimulus fades and imports decline

• The yuan has gained by 2.3% against the US dollar from June to November

• Net inflow of foreign exchange to China in the third quarter of 2010 amounted to US $114 billion, helped out by the trade surplus