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GDP growth forecast to slow down
(Shenzhen Daily/Agencies)
Updated: 2005-03-31 14:36
China's economic growth will probably slow to 8.9 percent in the year through the first quarter and then ease further, the central bank's think tank said in an outlook echoing one issued by another top research body.
The two forecasts, appearing a day apart, both suggested that the economy was responding to government attempts at slowing it. Both also defied recent data suggesting no let-up in economic growth, which was 9.5 percent in the year through the fourth quarter.
"Strong external demand is still a key driving force for economic growth and private investors remain confident, although rapid investment growth has been contained," the research bureau of the People's Bank of China said in a lengthy report seen Wednesday.
The economy was forecast to grow 8.6 percent in the year to the second quarter, 8.6 percent in the year to the third quarter before picking up slightly to 8.7 percent for the fourth quarter, said the report, which was published in the Financial News.
The other government think-tank, the State Information Center, said in a report seen on Tuesday that economic growth would probably slow to 8.8 percent in the year through the first quarter.
In all of the latest six quarters, gross domestic product (GDP) has been more than 9 percent, higher than a year earlier, showing little sign of growth trending lower.
China's consumer inflation would probably be 3 percent in the year through the first quarter, 3.2 percent for the second quarter, 3.1 percent for the third and 2.9 percent for the fourth, the central bank's research bureau said.
Rising global inflation and robust rises in producer prices, or the cost of goods leaving the factory gate, would gradually filter into consumer prices, but cooling money supply meant that price increases would be limited over time, the bureau said.
"Now that money supply has slowed into a reasonable range, which will help relieve pressure on price rises," it said.
But "the possibility of a rebound in investment growth is bigger than upward pressure on prices", it said, suggesting a tougher job for authorities to rein in fixed-asset investment.
Chinese officials have warned that inflationary pressure has not fundamentally eased and that fixed-asset investment, which the authorities have been trying to restrain, could yet rebound.
Most recent data have given little comfort to policy makers looking for evidence that economic growth will soon slow below 9 percent, easing the risk of a boom turning to a bust.
Fixed-asset investment in the first two months of 2005 was stronger than expected, up 24.5 percent on a year earlier. Consumer prices rose a faster-than-expected 3.9 percent in the year through February.
But broad money (M2) supply growth slowed to 13.9 percent in the year through end-February, extending a cooling trend seen since late 2004, while producer prices were 5.4 percent higher in the year through February, slower than January's 5.8 percent rise.
Inflation, which hit a seven-year high of 5.3 percent in the 12 months through August, was a key factor behind China's decision in October to raise interest rates for the first time in nine years as part of steps to cool heated investment and head off high inflation.
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