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China economy still weak but inflation also slows
By Wang Yanlin |
October 8, 2012, Monday
|
Online Edition
Online Edition
CHINA'S economic data for September may remain weak due to sluggish demand at home and abroad and its third-quarter gross domestic product may be lower than expected, analysts said before the data's release next week.
However, inflation growth may slow again after August's acceleration, leaving more room for policy adjustment.
"It is hard to say when China's economic recovery will be in sight," said Lu Zhengwei, chief economist at Industrial Bank. "We had expected an economic stabilization in the third quarter, but the weak performance in the past few months failed our expectation."
The priority now is to find funds for various projects approved by the central government, which were considered essential to stabilize the economic growth, Lu said.
He expected industrial production in September to expand 8.7 percent year on year, weakening further from August's 8.9 percent. Fixed asset investment may rise 20 percent, slower than 20.2 percent a month earlier.
UBS economist Wang Tao also said the September data will indicate the demand remained weak, destocking continued and recovery has yet to happen.
"But on the upside, we expect to see a faster pace of credit and social financing expansion, a continued rebound in property sales and accelerated infrastructure investment," Wang said.
Tang Jianwei, an analyst at Bank of Communications, said moderating inflation will be a piece of good news.
"Although the third round of quantitative easing in the United States raised the possibility of higher imported inflation, the growth of consumer prices is likely to decelerate in September due to falling vegetable costs and dwindling domestic demand," Tang said.
He expected the Consumer Price Index, the main gauge of inflation, to increase 1.8 percent from a year earlier in September, down from 2 percent in August.
However, inflation growth may slow again after August's acceleration, leaving more room for policy adjustment.
"It is hard to say when China's economic recovery will be in sight," said Lu Zhengwei, chief economist at Industrial Bank. "We had expected an economic stabilization in the third quarter, but the weak performance in the past few months failed our expectation."
The priority now is to find funds for various projects approved by the central government, which were considered essential to stabilize the economic growth, Lu said.
He expected industrial production in September to expand 8.7 percent year on year, weakening further from August's 8.9 percent. Fixed asset investment may rise 20 percent, slower than 20.2 percent a month earlier.
UBS economist Wang Tao also said the September data will indicate the demand remained weak, destocking continued and recovery has yet to happen.
"But on the upside, we expect to see a faster pace of credit and social financing expansion, a continued rebound in property sales and accelerated infrastructure investment," Wang said.
Tang Jianwei, an analyst at Bank of Communications, said moderating inflation will be a piece of good news.
"Although the third round of quantitative easing in the United States raised the possibility of higher imported inflation, the growth of consumer prices is likely to decelerate in September due to falling vegetable costs and dwindling domestic demand," Tang said.
He expected the Consumer Price Index, the main gauge of inflation, to increase 1.8 percent from a year earlier in September, down from 2 percent in August.
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