|Although exports have slowed down, they contributed to China's GDP growth in 2008. But in this gloomy global economy, some factories will close and workers will lose jobs as it slows down further.|
The details of the third quarter report provided some good news. Exports are slowing gradually, but still contributed to the GDP growth in 2008. Retail sales growth hit its highest level in nine years and was at 18% in real terms in September. So far, Chinese consumption is holding up. And the easing of inflation to under 5% means that the government has scope to loosen monetary and fiscal policy. The government is planning to respond to the potential for further growth declines with accelerated spending on reconstruction of the earthquake-affected areas and with infrastructure projects more generally.
The World Bank released the China Quarterly Update —of which I’m the lead author, full disclosure here-- today at a press launch in our Beijing office. The economic journalists noticed that the Bank’s projection for GDP growth in 2008 is now 9.8 percent, more than 2 percentage points lower than the outcome in 2007.
Soaring food prices have suddenly become a major concern for policy makers in East Asia. The price of rice - which provides one third of the region's caloric intake - is a particular worry. Rice prices have been moving higher since around 2004, although this was from very depressed levels in the early years of the decade. Prices surpassed $300 a ton in early 2006 for the first time since the late 1990s, kept moving higher, and then took off at an accelerating pace from late 2007: up 11 percent in the the fourth quarter, then 56 percent in the first quarter of 2008 an
I see there has been some blog chatter about the World Bank's position on Thailand's rice exports. Let me take the chance here to set the record straight: Thailand is a great international trading partner, it's commited to maintaining its rice exports, and we support this action. This is very important at this time of food price hikes and it's the responsible thing to do.
Last week China reported its first quarter GDP data. Consumer inflation for the quarter was 8%, which is too high, but we already knew that. The main news was that GDP growth came in at 10.6% year-on-year. This is down from last year’s 11.7% rate, but higher than most forecasts for 2008 (including the Bank’