Board pre­dicts mod­est ex­pan­sion world­wide

China Daily (USA) - - FRONT PAGE - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

The US is likely to ex­pe­ri­ence mod­est eco­nomic growth in 2017 while China will see just about the same level of growth it had this year as the world econ­omy re­mains on a slow ex­pan­sion track, ac­cord­ing to fore­casts from The Con­fer­ence Board.

Geopo­lit­i­cal ten­sions, pol­icy un­cer­tainty, mar­ket volatil­ity, and rapid changes in tech­nol­ogy will pin the world econ­omy to a slow-growth path, the board’s Global Eco­nomic Out­look 2017 said Wed­nes­day. The New York-based or­ga­ni­za­tion de­scribes it­self as a non­profit, in­de­pen­dent busi­ness mem­ber­ship and re­search as­so­ci­a­tion that is more than 100 years old and works in the pub­lic in­ter­est.

“It is now un­de­ni­able that the global econ­omy is stag­nant,” said Bart van Ark, the board’s chief econ­o­mist.

The re­port projects world gross do­mes­tic prod­uct (GDP) will ad­vance 2.8 per­cent next year, up slightly from the an­tic­i­pated 2.5 per­cent in 2016. The US econ­omy should ex­pand at a 2 per­cent rate in 2017 com­pared to 1.6 per­cent this year.

For China, the board uses a method­ol­ogy that is dif­fer­ent from the re­sults pro­duced by China’s Na­tional Bureau of Statis­tics (NBS) to de­ter­mine main­land GDP, ac­cord­ing to Erik Lundh, the board’s China econ­o­mist.

“We use a method­ol­ogy based on the work of Harry X. Wu (of Ja­pan’s Hi­tot­sub­ashi Univer­sity) to de­velop al­ter­na­tive growth and pro­duc­tiv­ity es­ti­mates for China that is based more on sup­ply fac­tors,” he said.

The re­ports said that the Chi­nese econ­omy will grow 3.8 per­cent in 2017, down slightly from 3.9 per­cent in 2016. The Chi­nese gov­ern­ment aims for an­nual GDP growth of about 6.5 per­cent us­ing the NBS’s method­ol­ogy.

Jing Sima, a se­nior econ­o­mist with the board, said China is mak­ing progress on restruc­tur­ing its econ­omy to em­pha­size ser­vices and con­sump­tion over man­u­fac­tur­ing and ex­ports which is pro­duc­ing slower growth in the in­dus­trial sec­tor.

“So you have the in­dus­trial sec­tor with less of a share be­cause of the slow­down and not be­cause it is pol­icy driven,” Sima said.

Van Ark said the long-term trend in China is dom­i­nated by de­mo­graph­ics (an ag­ing so­ci­ety) and a slow­down in in­vest­ment.

Lundh said it’s sim­ply too early to get a read on the im­pact of an ad­min­is­tra­tion of Pres­i­dent Don­ald Trump will do.

“I don’t think many peo­ple know what this means. It’s a ques­tion mark that we hope to bet­ter un­der­stand over the next few months,” he said.

Van Ark said the key el­e­ments for Trump are the first 100 days in of­fice and what will hap­pen af­ter that. Trump plans to re­port­edly sharply in­crease in­fra­struc­ture spend­ing in the US.

“We have a tight­en­ing la­bor mar­ket and one ques­tion is are the work­ers there to build and re­model the in­fra­struc­ture,” said van Ark.

TCB said it is a non­profit, in­de­pen­dent busi­ness mem­ber­ship and re­search as­so­ci­a­tion work­ing in the pub­lic in­ter­est and is over 100 years old.

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