In unison with the release of its latest East Asia Pacific Economic Update, the World Bank has cautioned Asia, including China, against removing stimulus too soon.
Asia should ease back on stimulus measures, but it shouldn’t risk cutting them too fast too soon. For China, they point out that ‘government-led investment was the key driver of growth for much of 2009.’ Furthermore, ‘Inflation has turned positive, but it is likely to remain modest in 2010.’ Still, they hedged themselves against the risk of asset bubbles within the economy, such as is suspected with property.
Overall the World Bank view seems to coincide with the IMF’s warning against governments pulling stimulus too soon, and even OPEC’s, who is also cheer-leading stimulus in order to keep oil demand nice and robust.
Thing is, it’s pretty easy to ask the world to keep spending pumping money into the economy when it’s not your money that’s being spent.
Find the full report at the World Bank.
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