Econ­o­mists raise China GDP fore­cast af­ter H1 growth beats es­ti­mates

Muscat Daily - - BUSINESS -

Hong Kong, China - Econ­o­mists raised their fore­casts for China’s eco­nomic out­put af­ter growth in the first half beat es­ti­mates. That ro­bust ac­tiv­ity is giv­ing pol­icy mak­ers’ room to curb ex­ces­sive and spec­u­la­tive borrowing.

China’s gross do­mes­tic prod­uct (GDP) will ex­pand by 6.7 per cent from a year ago in the third quar­ter and 6.6 per cent in the fourth quar­ter, ac­cord­ing to the me­dian of 57 econ­o­mist es­ti­mates in a July 17

24 Bloomberg sur­vey. Both fore­casts were 0.1 per­cent­age point higher than a month ago.

The ex­pan­sion in the sec­ond quar­ter beat mar­ket ex­pec­ta­tions and with growth this year on track to meet the gov­ern­ment’s target, pol­icy mak­ers will have more lee­way to act to con­tain risks and achieve sta­bil­ity, a pri­or­ity that was iden­ti­fied at a top-level fi­nan­cial work con­fer­ence ear­lier this month.

“The ex­pan­sion in the sec­ond quar­ter is a pos­i­tive sign, as it high­lights the re­silience of China’s econ­omy in the face of Bei­jing’s ef­forts to curb ex­ces­sive borrowing to dif­fuse fi­nan­cial risks,” Car­los Casanova, econ­o­mist at Co­face in Hong Kong wrote in a note. “The au­thor­i­ties need to main­tain a well-oiled ma­chine” ahead of the 19th Party Congress in the fall, he said. “For this rea­son, we do not en­vi­sion an abrupt de­cel­er­a­tion in the third quar­ter, but there is lit­tle room for fur­ther pol­icy tight­en­ing go­ing for­wards.” Ex­pec­ta­tions for in­fla­tion slowed slightly, with fore­casts for both con­sumer and pro­ducer prices lower than last month. Con­sumer prices will rise 1.8 per cent in the third quar­ter, and then two per cent in the fourth quar­ter. Fac­tory gate in­fla­tion has peaked, and pro­ducer prices will slow to 4.8 per cent in the three months through Septem­ber, be­fore drop­ping fur­ther to 2.5 per cent in the fi­nal quar­ter.

Bench­mark in­ter­est rate and re­quired bank re­serve ra­tio pro­jec­tions were un­changed for the rest of the year. M2 money sup­ply will rise 9.8 per cent this year, ver­sus 10.1 per cent seen in June’s sur­vey.

China’s GDP is es­ti­mated to ex­pand by 6.7 per cent in the third quar­ter and 6.6 per cent in the fourth quar­ter

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