China to deliver 9.4% growth in 2010 – more than double world average

CHINA is expected to deliver growth of 9.4% in 2010, more than double the world average of 3.4%.

Having fallen by 1.25% this year the world economy is back on a growth trajectory and is set to grow by 4.2% in 2011.

The good news according to Alan McQuaid, chief economist, Bloxham Stockbrokers, is that “the broad trend of an unfolding recovery seems very clear in all nations”.

Critical to that view is the traction taking place in the US, said McQuaid.

US consumer spending is showing signs of stabilisation and recovery, he said.

“Personal consumption expenditures (PCE) are climbing again from their steepest plunge in recent decades,” he said.

This suggests consumers are back spending and the consumer recession is drawing to and the surge in household-sector savings has reached its peak.

In contrast Europe has been slower to pick up so far, the Euroland recovery process has been rather feeble, although the labour market appears to be stabilising quicker than elsewhere in the globe.

McQuaid said the strong euro has “sapped” some strength from the eurozone economy while ECB’s conservative stance has “restrained both the pace and strength of the recovery”.

“Nonetheless, signs of broad-based stabilisation and recovery in business activity are emerging,” he said.

Overall, he said, China is the economy that “stands out”.

“Economic boom-times have returned, with strengthening domestic demand and soaring real estate prices,” he said.

China is still suffering from weak external demand but private consumption and capital spending are expanding rapidly.

Those twin factors have more than compensated for the lost demand from overseas.

“It looks likely that China’s GDP growth will reach double digits in the coming quarters, and that some form of policy tightening will be inevitable as a result,” he said.

Given that momentum China is likely to deliver growth of 10.2% in 2111, he said.

By comparison the Irish economy is going through a huge period of adjustment which means it will struggle next year before returning to solid growth in 2011.