The senior economist of the mainland's State Statistical Bureau yesterday forecast the consumer price index (CPI) would turn positive this year, after two years of deflation, and that gross domestic product would grow about 8 per cent in the first half of the year. In 1998 the mainland's CPI fell by 0.8 per cent. It fell 1.4 per cent last year. It rose 0.7 per cent in February this year but fell 0.2 per cent and 0.3 per cent in March and April, recording zero growth for the first four months. 'For all of this year it should be positive,' Qiu Xiaohua said. 'World oil prices are increasing, domestic demand is picking up and the prices of power, industrial goods and raw materials are going up.' 'In nearly half the major cities, the index has switched from negative to positive. If these trends continue, it will be positive for the year.' The CPI would illustrate whether the economy was recovering after government spending of billions of yuan, seven cuts in interest rates since 1996 and 10 days of official holiday a year for urban residents, from this year. Mr Qiu gave no forecast for retail price inflation, which measures a more narrow range of goods. It declined by 2.6 per cent in 1998 and 3 per cent last year. He said GDP growth would be slightly lower in the second quarter than the 8.1 per cent in the first quarter, making a figure of close to 8 per cent for the first half of the year. In the four-month period, trade rose 38.8 per cent to US$137.1 billion, exports rose 39 per cent to US$72.2 billion and imports rose 38.6 per cent to US$64.9 billion.