China's economic growth will rise at 9.8 %: WB

In its quarterly update, the Bank said despite less buoyant investment, the domestic economy was "holding up well" in China, where the economic activity had moderated in line with the global economys slowdown.     

However, it said, the real growth of exports and imports remained robust, sharply higher import prices were inflating import values and bringing down Chinas trade surplus, even as the contribution of net trade to growth remains positive.     

"We expect Chinas GDP growth to moderate to a solid 9.8 per cent in 2008," the Bank Country Director for China David Dollar said. "The upward revision to our growth forecast largely reflects revised GDP data showing stronger service sector growth."     

The Bank had forecast GDP growth of 9.4 per cent in April, down from the 9.6 per cent forecast in the beginning of 2008 and 10.8 percent made in mid 2007.     

The devastating earthquake in southwest China on May 12 is expected to have only a "moderate impact" on the wider economyv with a direct economic loss of $ 58 to 73 billion, the report released at a news conference here today said.     

Over a discussion on rising prices which has emerged as a major worry to the government, the Bank said the headline inflation was receding even as non-food price pressures emerge, and added, "food price increases are already starting to fade from consumer price data".     

The report noted that some spill-over from the higher food prices was flowing into wages and some other prices, while new impact from recent industrial commodity and oil price hikes was in the pipeline.     

"Despite this, generalised spill-over to consumer prices remained limited and headline consumer price inflation is tipped to recede gradually," it said.