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Morgan Stanley predicts 8.2% growth for Chinese economy
By Ye Zhen |
March 14, 2013, Thursday
|
Online Edition
Online Edition
CHINA'S economic recovery is likely to maintain momentum in 2013 while accelerating inflation may lead to an interest rate hike in the second half of the year, economists said.
Gross domestic product is expected to grow 8.2 percent in 2013, outpacing the government target of 7.5 percent set earlier this month, Helan Qiao, Morgan Stanley's chief economist for China, said in a media briefing today.
The optimism is based on a warming housing market and less policy risks after the leadership transition.
"The property market continues to recover as indicated by the increasing land sales in the first-tier and second-tier cities, which will help building material suppliers sell through their surplus capacity," said Qiao, "Meanwhile, fewer policy risks after the leadership transition will boost market efficiency."
Morgan Stanley raised its estimate for inflation to 3.2 percent this year, up from a previous forecast of 3 percent but still slower than the 3.5 percent government target, as rebounding domestic demand due to the loose monetary policy earlier this year will push up consumer prices in the third quarter.
"China's central bank will increase the benchmark interest rate by 25 basis points before year-end as inflation climbs further," Qiao said.
The economic recovery was shadowed by a set of data released over the weekend, with the growth of industrial production slowing to 9.9 percent in the first two months of the year, down from an increase of 10.3 percent in December, and retail sales growth decreasing to 12.3 percent, a sharp decline from December's 15.2 percent.
However, a separate report by Li Wei, Stephen Green and Shen Lan, economists from Standard Chartered Bank, said: "The weaker industrial output and retail sales numbers were likely temporary setbacks and retail sales were probably hit by a crackdown on wasteful government spending, banquets and gifts."
The bank expected China's economy to expand at 8.3 percent in 2013 and consumer price growth to quicken to 4 percent for the year. The bank forecasted a 25-basis-point interest rate hike in the fourth quarter, followed by four more hikes in 2014.
Gross domestic product is expected to grow 8.2 percent in 2013, outpacing the government target of 7.5 percent set earlier this month, Helan Qiao, Morgan Stanley's chief economist for China, said in a media briefing today.
The optimism is based on a warming housing market and less policy risks after the leadership transition.
"The property market continues to recover as indicated by the increasing land sales in the first-tier and second-tier cities, which will help building material suppliers sell through their surplus capacity," said Qiao, "Meanwhile, fewer policy risks after the leadership transition will boost market efficiency."
Morgan Stanley raised its estimate for inflation to 3.2 percent this year, up from a previous forecast of 3 percent but still slower than the 3.5 percent government target, as rebounding domestic demand due to the loose monetary policy earlier this year will push up consumer prices in the third quarter.
"China's central bank will increase the benchmark interest rate by 25 basis points before year-end as inflation climbs further," Qiao said.
The economic recovery was shadowed by a set of data released over the weekend, with the growth of industrial production slowing to 9.9 percent in the first two months of the year, down from an increase of 10.3 percent in December, and retail sales growth decreasing to 12.3 percent, a sharp decline from December's 15.2 percent.
However, a separate report by Li Wei, Stephen Green and Shen Lan, economists from Standard Chartered Bank, said: "The weaker industrial output and retail sales numbers were likely temporary setbacks and retail sales were probably hit by a crackdown on wasteful government spending, banquets and gifts."
The bank expected China's economy to expand at 8.3 percent in 2013 and consumer price growth to quicken to 4 percent for the year. The bank forecasted a 25-basis-point interest rate hike in the fourth quarter, followed by four more hikes in 2014.
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