The Asian Development Bank (ADB) forecast in a report Tuesday morning that economic growth in China would slow to 7 percent in 2009 as a result of world economic downturn.

ADB's flagship annual economic publication, Asian Development Outlook 2009, said China's economic growth rate would drop to 6 percent in the first quarter from 6.8 percent in the fourth quarter last year.

This report came after a previous forecast published by the World Bank (WB) in mid-March, which said China's economy would expand 6.5 percent in 2009.

China's economy expanded 9 percent in 2008, the lowest rate since 2001, government figures show. It also was the first time China's gross domestic product （GDP）growth fell into the single-digit range since 2003.

"An easing in domestic demand, compounded by weaknesses in exports, weighed on economic growth last year," the report said. "However, the government has switched to expansionary fiscal and monetary policies to support growth. The moves will moderate the slowdown that is forecast for 2009."

Last year, the central government launched a four-trillion-yuan (about 586 billion U.S. dollars) stimulus package as part of its efforts to cope with the financial crisis.

Adding to the plan were ten industrial revival policies, which were expected to provide several pillar sectors with funding support, tax breaks and other favorable policies. Automobile, shipment and textile industries were among those that benefited.

Robert Withol, ADB Country Director for China said:" China's fiscal stimulus package had recently been complemented. The economy was reacting positively to the stimulus, and the impact is enhanced by abundant liquidity and active banking lending."

March economic data suggested that fixed asset investment, one of the major driving forces of China's economy, was robust. It surged by 26.5 percent in the first two months over the same period last year.

"China's economy should rebound in 2010 after the government's economic stimulus package had time to take effect. The GDP will grow 8 percent in 2010," said the report.

Meanwhile, the bank expected China's inflation pressure to ease to less than 1 percent in 2009 from 2008's 5.9 percent, as a result of lower than average prices for oil and other industrial commodities.

Zhuang Jian, the ADB senior economist told Xinhua the consumer price index, main gauge of inflation, was expected to rise 0.8 percent in 2009, the lowest in one decade.

According to the ADB, a balance between investment, export-led growth and private consumption as a growth driver remain challenges for China.

The bank suggested the Chinese government speed up economic reform and adjust the industrial structure to reduce reliance on export and investment.

Economic growth in developing Asia will slide to 3.4 percent in 2009, down from 6.3 percent last year and 9.5 percent in 2007, forecast the ADB.

The bank, which was established in 1966 and is headquartered in the Philippines, is a multilateral and regional financial institution in Asia and Pacific regions. It has 67 members. China joined the bank as a member in 1986.

(Xinhua News Agency March 31, 2009)