OECD pre­dicts growth to con­tinue in China and move higher in the US

China Daily (USA) - - BUSINESS - By FU JING in Brus­sels fu­jing@chi­nadaily.com.cn

China’s econ­omy will grow at 6.7 per­cent this year, but will edge down to 6.4 per­cent and 6.1 per­cent in 2017 and 2018 re­spec­tively, the Paris-based Or­ga­ni­za­tion for Eco­nomic Co-op­er­a­tion and Development (OECD) said on Mon­day in its lat­est Eco­nomic Out­look, which is pub­lished twice each year.

Its three-year pre­dic­tions are roughly con­sis­tent with the Chi­nese gov­ern­ment’s goal of achiev­ing an av­er­age an­nual rate of 6.5 per­cent dur­ing the 2016-20 pe­riod to re­al­ize its tar­get of dou­bling the per capita in­come by 2020 from a 2010 base, al­though the OECD said China needs to ar­rest the down­ward trend in 2019 and 2020 if it is to reach that goal.

Lead­ing Chi­nese pol­icy in­sid­ers said the OECD pre­dic­tions for the three years were rea­son­able as growth fluc­tu­a­tions were nor­mal and ac­cept­able in the process of re­struc­tur­ing the econ­omy and China “en­joys more ad­van­tages than dis­ad­van­tages” in keep­ing its an­nual eco­nomic growth rate at 6 to 7 per­cent in the 2016-20 pe­riod, as long as the economies of the United States, Ja­pan and the EU also of­fer growth mo­men­tum.

The OECD said the US econ­omy is go­ing to pick up, due to an as­sumed eas­ing of fis­cal pol­icy, with the econ­omy pro­jected to grow by 2.3 per­cent in 2017and3 per­cent in2018. The euro area is pre­dicted to grow 1.6 per­cent in 2017 and 1.7 per­cent in 2018. Ja­panese growth is pro­jected at 1 per­cent in 2017 and 0.8 per­cent in 2018.

The re­port says that the to­tal growth of the 35 OECD coun­tries is pro­jected to be 2 per­cent in 2017 and 2.3 per­cent in 2018. In­dia’s growth rates are ex­pected to hover above 7.5 per­cent over the 2017-18 pe­riod, but many emerg­ing mar­ket economies will con­tinue to grow at a more slug­gish pace.

“The global econ­omy has the prospect of mod­estly higher growth, after five years of dis­ap­point­ingly weak out­comes,” OECD Sec­re­tary-Gen­eral An­gel Gur­ria said, while launch­ing the re­port in Paris. “In light of the cur­rent con­text of low in­ter­est rates, pol­i­cy­mak­ers have a unique win­dow of op­por­tu­nity to make more ac­tive use of fis­cal levers to boost growth and re­duce in­equal­ity with­out com­pro­mis­ing debt lev­els. We urge them to do so.”

The or­ga­ni­za­tion said global growth will grow by 3.3 per­cent in 2017 and 3.6 per­cent in 2018.

Chi Fulin, pres­i­dent of the China In­sti­tute for Re­form and Development, said the mes­sages in the OECD re­port were quite pos­i­tive and China’s con­tin­u­ing eco­nomic re­struc­tur­ing would also ben­e­fit from the up­side pro­jec­tions of the global econ­omy and ad­vanced coun­tries.

“There is no prob­lem for China to keep its tar­get of an av­er­age rate of 6.5 per­cent of eco­nomic growth dur­ing the 2016-2020 pe­riod. Plus, China has much un­tapped po­ten­tial to main­tain a medium and high rate, given such a pop­u­lous and ma­ture mar­ket,” said Chi, a lead­ing pol­icy ad­viser for the gov­ern­ment.

“The pre­dic­tions on growth trends of the ad­vanced economies will fur­ther help China main­tain faster growth.”

Chi urged the in­ter­na­tional com­mu­nity to look at China’s fluc­tu­a­tions in growth rates with “a ra­tio­nal mind­set.”

“This is be­cause China is now chang­ing its in­vest­ment- and ex­port-driven model to other growth en­gines, such as con­sump­tion, in­no­va­tion, green development and up­grad­ing of peo­ple’s life qual­ity,” said Chi. “There­fore, the fluc­tu­a­tions in the next five years are ex­pected and healthy.”

How­ever, Chi said the fluc­tu­a­tions would be man­age­able and growth would stay at 6-7 per­cent. “So, I am very con­fi­dent that China can de­liver its tar­gets dur­ing the 2016-20 pe­riod, in or­der to re­al­ize the goal of dou­bling growth of per capita in­come from 2010 to 2020.”

The global econ­omy has the prospect of mod­estly higher growth, after five years of dis­ap­point­ingly weak out­comes.” An­gel Gur­ria, sec­re­tary-gen­eral of the OECD

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