Credit Suisse cuts China's GDP outlook
By Wang Yanlin |
June 15, 2012, Friday
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Print Edition
Print Edition
CREDIT Suisse Group AG cut its forecast for China's economic growth this year to 7.7 percent - the latest bank to lower estimates following a slowdown in the world's second-largest economy.
The Swiss bank attributed the downward revision to falling corporate profits and an investment slowdown.
"Investment is unlikely to see a meaningful rebound in the foreseeable future," said Tao Dong, chief China economist at Credit Suisse yesterday, predicting "years of weak growth" for the country.
But the bank's estimate was higher than the government's target, which was cut to 7.5 percent this year from a previous 8 percent that had been in place since 2005.
In the 12th Five-Year Plan (2011-2015) the government has set the economic goal at 7 percent.
Credit Suisse followed many other banks and institutions which cut their forecasts. In April, the World Bank adjusted its outlook over China's economic growth this year to 8.2 percent from 8.7 percent previously. The Asian Development Bank also slashed its projection to 8.5 percent from 9.1 percent, citing external risks that threaten China's exports.
Last week, China unveiled an interest rate cut to spur domestic demand, the first rate cut since December 2008. The reserve requirement ratio was cut in May to allow more liquidity in the banking system.
China has also introduced other measures, including subsidies for buying energy-efficient products, faster approval of new investment, acceleration of tax reform and expansion of private capital in formerly state-dominated fields.
Some economists said China may recover in the second quarter if the measures filter through.
But Zheng Xinli, deputy head of the China Center for International Economic Exchanges, said China's economic growth could drop below 7 percent in the second quarter if there is no sharp improvement in June's economic data.
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