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Economy looks rosy but inflation may rebound
By Wang Yanlin |
August 6, 2010, Friday
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Online Edition
Online Edition
THE trend of China's moderating economic growth has extended into July and will be reflected in July's key economic data due to be released next week, analysts said.
The country's economy is broadly in good shape, moving in the same direction as anticipated by policymakers, some analyst said. But they cautioned inflation may rebound.
"We expect the moderating trend in the second quarter will extend into July," said Wang Qing, a Morgan Stanley economist. "It has been reflected in the China Manufacturing Purchasing Managers' Index, which showed a low reading in July primarily due to seasonal effects and supply-side adjustment."
China Manufacturing PMI, a comprehensive indicator of industrial activities, slipped 0.9 percentage points from a month earlier to 51.2 percent in July.
Wang predicted China's industrial production will further ease to a growth of 13.5 percent last month, due to "high temperature and government's redoubled efforts in closing down energy-inefficient industries."
On the front of inflation, Wang was not optimistic even though June's Consumer Price Index, a main gauge of inflation, was actually easing from the figure a month earlier.
"We forecast that CPI will rebound to 3.4 percent from 2.9 percent in June, driven up mainly by food price inflation," Wang said.
He noted vegetable prices staged a big rally last month due to supply disruption caused by heavy rains and floods, while state reserve-building and low-hog inventory led to further rise of meat prices.
The country's economy is broadly in good shape, moving in the same direction as anticipated by policymakers, some analyst said. But they cautioned inflation may rebound.
"We expect the moderating trend in the second quarter will extend into July," said Wang Qing, a Morgan Stanley economist. "It has been reflected in the China Manufacturing Purchasing Managers' Index, which showed a low reading in July primarily due to seasonal effects and supply-side adjustment."
China Manufacturing PMI, a comprehensive indicator of industrial activities, slipped 0.9 percentage points from a month earlier to 51.2 percent in July.
Wang predicted China's industrial production will further ease to a growth of 13.5 percent last month, due to "high temperature and government's redoubled efforts in closing down energy-inefficient industries."
On the front of inflation, Wang was not optimistic even though June's Consumer Price Index, a main gauge of inflation, was actually easing from the figure a month earlier.
"We forecast that CPI will rebound to 3.4 percent from 2.9 percent in June, driven up mainly by food price inflation," Wang said.
He noted vegetable prices staged a big rally last month due to supply disruption caused by heavy rains and floods, while state reserve-building and low-hog inventory led to further rise of meat prices.
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