China's growth forecast cut
By Hu Xiaocen |
October 9, 2012, Tuesday
|
Print Edition
Print Edition
THE World Bank yesterday cut its forecast for China's economic growth to 7.7 percent in 2012 from earlier projection of 8.2 percent in May on weaker domestic and external demand.
However, monetary measures already taken, stimulus policies rolled out by some provincial governments, and accelerated approval of investment projects will help China's growth rebound to 8.1 percent next year, it said in a report released yesterday. These will greatly cut the risk of the world's second largest economy suffering a hard landing, it said.
China's gross domestic product grew just 7.6 percent in the second quarter this year from a year ago, marking a deceleration from 8.1 percent in the previous quarter and the slowest growth since early 2009, according to the National Bureau of Statistics.
Domestic demand slowed in the first half of 2012 while the rest of East Asia and Pacific region remained robust, the report said.
The slowdown was led by a fall in investment following government measures to curb property market speculation. Private investment declined most, while state investment began to accelerate again from the end of 2011, the bank said.
Its report also noted that China's consumption contributed more to GDP growth than investment for the first time.
"Some observers see this as the start of a trend in China's domestic rebalancing and associate this with a more permanent growth slowdown in the country," it said. "Although earlier reports said rebalancing and a gradual slowdown in growth will happen over the next two decades, it seems too early to tell whether the tide has already turned.
"Moreover, relaxation in monetary policy earlier this year and a local government stimulus could again reverse this trend in months to come."
The bank said the East Asia and Pacific region will grow at 7.2 percent this year compared to its 7.6 percent projection in May.
The World Bank is not alone in cutting growth estimates. The Asian Development Bank, ratings firms and investment banks such as Citibank have already cut their forecasts.
However, monetary measures already taken, stimulus policies rolled out by some provincial governments, and accelerated approval of investment projects will help China's growth rebound to 8.1 percent next year, it said in a report released yesterday. These will greatly cut the risk of the world's second largest economy suffering a hard landing, it said.
China's gross domestic product grew just 7.6 percent in the second quarter this year from a year ago, marking a deceleration from 8.1 percent in the previous quarter and the slowest growth since early 2009, according to the National Bureau of Statistics.
Domestic demand slowed in the first half of 2012 while the rest of East Asia and Pacific region remained robust, the report said.
The slowdown was led by a fall in investment following government measures to curb property market speculation. Private investment declined most, while state investment began to accelerate again from the end of 2011, the bank said.
Its report also noted that China's consumption contributed more to GDP growth than investment for the first time.
"Some observers see this as the start of a trend in China's domestic rebalancing and associate this with a more permanent growth slowdown in the country," it said. "Although earlier reports said rebalancing and a gradual slowdown in growth will happen over the next two decades, it seems too early to tell whether the tide has already turned.
"Moreover, relaxation in monetary policy earlier this year and a local government stimulus could again reverse this trend in months to come."
The bank said the East Asia and Pacific region will grow at 7.2 percent this year compared to its 7.6 percent projection in May.
The World Bank is not alone in cutting growth estimates. The Asian Development Bank, ratings firms and investment banks such as Citibank have already cut their forecasts.
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