The global financial crisis has bottomed out but the world economy may need three to five years to recover, according to renowned economist Fan Gang.

He said the current crisis was greater than the Great Depression of the 1930s but it would not last as long as that period's 10 years because of concerted efforts by major economies.

"The global financial crisis should have passed 60 percent of its lifespan but the world economy still requires three to five years to correct," said Fan, director of the National Economics Research Institute and an adviser to the central bank.

"The three major economies - the United States, Japan and the European Union, may face negative growth in the future one to two years, followed by another several years of slow expansion. But it won't last more than a decade," Fan said.

Fan said China should actively bolster domestic demand to counter a deteriorating trade environment.

China's export and import growth both fell below 20 percent in October because of weaker demand. Fan said China's overseas sales would continue to contract and put the domestic economy on route to a slowdown.

He said China's gross domestic product may moderate to below 9 percent in the last quarter of this year and further cool to around 8 percent next year. "If China can sustain the growth above 8 percent in 2009, it will be a great achievement. The economic expansion may return to between 8 and 9 percent in 2010," said Fan.

In his view, it was still risky for China to invest corporate assets in Wall Street but the country could consider the acquisition of some manufacturing and resources companies.

Lessons from this crisis that China should absorb, he said, included that development of the service industry should be controlled to keep it in line with the manufacturing industry and that it was of great importance to build up a sound system to support the expansion of financial services.

(Shanghai Daily November 20, 2008)