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BEIJING, March 18 (Xinhua) -- The World Bank (WB) has cut its forecast for China's 2009 economic growth yet again -- this time to 6.5 percent from 7.5 percent, it said here Wednesday.

This is the second cut the bank has made for China's 2009 gross domestic product (GDP) growth forecast. Last November its prediction stood at 9.2 percent.

This came after the bank lowered its forecast for the 2009 world economy, which was expected to decline 1.5 percent from 2008. In November, the WB forecast the world economy would grow 1 percent this year.

Although China's economy had been hit hard by the global financial crisis, it was still holding up, the WB said in the China Quarterly Update.

The report, a regular assessment of the Chinese economy, found China's banks had been largely unscathed by the global financial turmoil and the economy still had plenty of space to implement forceful stimulus measures.

China was still likely to continue outgrowing most other countries in the global crisis, it said.

"Lower growth is not likely to jeopardize China's economic or social stability, especially not if the adverse consequences can be limited through the social safety net, preferably combined with education and training," said WB senior economist Louis Kuijs, the report's main author.

Less emphasis on targeting short-term GDP growth would allow for more emphasis on the rebalancing, reform agenda and the quality of growth, Kuijs said.

China's exports have been hit badly by the intensifying global crisis, affecting the market-based investment and sentiment, notably in the manufacturing sector. This was bound to contain China's growth in 2009 and 2010, it said.

China's exports plummeted 25.7 percent year on year in February after January's 17.5-percent plunge, the worst performance in a decade. February imports slumped 24.1 percent.

The country's GDP grew by 9 percent last year. The Chinese government has set an 8 percent GDP growth target for 2009.

However, Zhang Hanya, an economist with the National Development and Reform Commission, the country's top economic planner, forecast GDP would grow 10 percent this year if the government's economic stimulus measures paid off.

China's economic fundamentals were strong enough to look beyond2009, and the country should put less emphasis on short-term growth and more on longer term issues, said the report.

China was a relative bright spot in an otherwise gloomy global economy, said David Dollar, the WB's country director for China.

Recent initiatives to stimulate consumption and improve living standards by expanding the government's role and spending on health, education, and social protection measures were welcome and there was room to do more, said Dollar.

Shifting China's output from exports to domestic demand would help provide immediate stimulus while laying the foundation for more sustainable growth in the future, he said.

Since late last year, the government has announced aggressive measures to ease the domestic impact of the global downturn. These included a 4-trillion-yuan (585.7 billion U.S. dollars) stimulus package, a plan to expand rural home appliance purchases and support plans for key industries.

The WB report also highlighted the importance of financial sector reform in China. Further structural reforms in the financial system would help China manage the downturn and turn to a more balanced growth model, it said.




Editor: Sun