Wednesday, March 18, 2009

World Bank to China: Batten down the Hatches

The World Bank is predicting that growth in China will drop down to 6.5% below the targeted 8% (Imagethief points out that no one seems to know how that mythical 8% arrived at). The World Bank is warning China not to do it on the stimulus - but the interesting thing is why. According to the WSJ, it's because the World Bank believes China "may need to save its ammunition for 2010."

A number of clients have been telling me that they are estimating and not planning for a US emergence from the recession until late 2010 with significant concerns over what's being budgeted and how money is being spent. I worry that the ideological agenda in the US could push the recovery back even further than that - and when it does finally happen, it will be far slower than anyone has predicted.

Update: More from David Dollar at the World Bank with a few dramatic stats -

Export-oriented manufacturing and real estate construction are in decline, while at the same time there is rapid growth in infrastructure investment, manufacturing industries tied to that, and household consumption of both manufacturing items and services.

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