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Bank trims forecast for growth in China
By Wang Yanlin |
September 15, 2011, Thursday
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Print Edition
Print Edition
THE Asian Development Bank has cut its projection of China's economic growth rate for this year to 9.3 percent from a previous 9.6 percent because of weak global demand.
The Manila-based bank is among a number of institutions which trimmed their forecasts while maintaining a positive view of China's investment and consumption.
Introducing its Asian Development Outlook 2011 released yesterday, the bank said weakness in developed countries and the Chinese government's efforts to cool inflation were slowing the country's economic expansion. But it said it still saw strong investment and consumption driving China's 2011 economic performance.
Changyong Rhee, ADB's chief economist, said downside risks related mainly to uncertainties over external demand, in particular from the European Union, the country's largest trading partner.
Last month, institutions including JP Morgan, Morgan Stanley and Deutsche Bank all downgraded their projections for China's economy due to the worse-than-expected global economic climate.
China's gross domestic product expanded 9.5 percent from a year earlier in the second quarter, easing from 9.7 percent in the first three months and last year's 10.4 percent.
The bank predicted that fiscal policy will remain broadly expansionary this year and next, with higher government spending directed to education, health care, pensions, public housing and other social security programs.
Monetary authorities will maintain a tight policy until inflation recedes significantly, it said in its report.
It expected food price inflation to ease over the rest of this year due to a good autumn harvest, an upturn in pork supplies and a comparatively higher base, which can help keep inflation at 5.3 percent this year, up from a previous projection of 4.6 percent.
In the first eight months, China's consumer price index, the main gauge of inflation, was 5.6 percent year on year.
The rate in August cooled to 6.2 percent from a 37-month high of 6.5 percent in July, and was expected to lead a moderation in price rises.
The bank said that continuous reforms, including rebalancing the investment and export-led pattern of economic growth to put more emphasis on domestic consumption, will be crucial for long-term growth.
The Manila-based bank is among a number of institutions which trimmed their forecasts while maintaining a positive view of China's investment and consumption.
Introducing its Asian Development Outlook 2011 released yesterday, the bank said weakness in developed countries and the Chinese government's efforts to cool inflation were slowing the country's economic expansion. But it said it still saw strong investment and consumption driving China's 2011 economic performance.
Changyong Rhee, ADB's chief economist, said downside risks related mainly to uncertainties over external demand, in particular from the European Union, the country's largest trading partner.
Last month, institutions including JP Morgan, Morgan Stanley and Deutsche Bank all downgraded their projections for China's economy due to the worse-than-expected global economic climate.
China's gross domestic product expanded 9.5 percent from a year earlier in the second quarter, easing from 9.7 percent in the first three months and last year's 10.4 percent.
The bank predicted that fiscal policy will remain broadly expansionary this year and next, with higher government spending directed to education, health care, pensions, public housing and other social security programs.
Monetary authorities will maintain a tight policy until inflation recedes significantly, it said in its report.
It expected food price inflation to ease over the rest of this year due to a good autumn harvest, an upturn in pork supplies and a comparatively higher base, which can help keep inflation at 5.3 percent this year, up from a previous projection of 4.6 percent.
In the first eight months, China's consumer price index, the main gauge of inflation, was 5.6 percent year on year.
The rate in August cooled to 6.2 percent from a 37-month high of 6.5 percent in July, and was expected to lead a moderation in price rises.
The bank said that continuous reforms, including rebalancing the investment and export-led pattern of economic growth to put more emphasis on domestic consumption, will be crucial for long-term growth.
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