Monetary policy set to tighten further
Source: Agencies |
May 5, 2011, Thursday
|
Print Edition
Print Edition
CHINA'S roaring economy will slow a touch this year, with inflation staying stubbornly above the government's 4 percent target, arguing for monetary policy to tighten further, a Reuters poll showed yesterday.
The median forecast of 19 analysts surveyed showed the Chinese economy could grow 9.5 percent in 2011, slowing slightly from last year's 10.3 percent expansion.
In the second quarter, the world's second-biggest economy is predicted to grow 9.4 percent, a shade below the 9.7 percent seen in the first three months of this year.
"We expect the Chinese economy to continue with trend-growth pace in the coming quarters," JPMorgan said in a research note.
"Solid overall employment growth and broad-based wage gains should be supportive of steady overall consumer demand growth later this year."
Solid and steady economic growth is likely to sustain price pressures, however. Inflation for the year is seen accelerating to 4.5 percent, picking up from the 3.3 percent in 2010, before pulling back to 3.9 percent in 2012.
"Inflation is going to be fairly sticky, and it's only going to be a slow decline," said Glenn Maguire, an economist at Societe Generale in Hong Kong. "We would suggest that the official forecast is a little bit overly optimistic at this stage."
He expects China's inflation for 2011 to hit 5.5 percent.
Economists expect China to use a range of levers in coming months to control prices: interest rates, the reserve requirement ratio, and the yuan.
China has raised interest rates four times and banks' reserve requirements seven times since October.
The median forecast of 19 analysts surveyed showed the Chinese economy could grow 9.5 percent in 2011, slowing slightly from last year's 10.3 percent expansion.
In the second quarter, the world's second-biggest economy is predicted to grow 9.4 percent, a shade below the 9.7 percent seen in the first three months of this year.
"We expect the Chinese economy to continue with trend-growth pace in the coming quarters," JPMorgan said in a research note.
"Solid overall employment growth and broad-based wage gains should be supportive of steady overall consumer demand growth later this year."
Solid and steady economic growth is likely to sustain price pressures, however. Inflation for the year is seen accelerating to 4.5 percent, picking up from the 3.3 percent in 2010, before pulling back to 3.9 percent in 2012.
"Inflation is going to be fairly sticky, and it's only going to be a slow decline," said Glenn Maguire, an economist at Societe Generale in Hong Kong. "We would suggest that the official forecast is a little bit overly optimistic at this stage."
He expects China's inflation for 2011 to hit 5.5 percent.
Economists expect China to use a range of levers in coming months to control prices: interest rates, the reserve requirement ratio, and the yuan.
China has raised interest rates four times and banks' reserve requirements seven times since October.
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