UBS trims outlook for China's economy
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Shanghai Daily, August 26, 2011
UBS AG has joined other major banks in cutting the growth forecast for China's economy as it cites that weaker growth prospects in developed nations will affect the world's second-largest economy's exports.
The Swiss bank revised downwards growth in China's gross domestic product to 9 percent this year from an earlier projection of 9.3 percent. It also cut the growth estimate for 2012 to 8.3 percent from 9 percent.
Deutsche Bank and Morgan Stanley also cut their outlook as faltering economic growth in the United States and Europe as well as the eurozone's deepening debt crisis could affect demand for made-in-China goods such as clothes and electronic products from the world's largest exporter.
UBS said it lowered the forecast for China's export growth by 3 percentage points in volume to about 6 percent in 2012, and forecast net exports to trim 1 percentage point from GDP growth next year.
"A sharp drop in export growth, which may start in the fourth quarter of 2011, is also likely to hit manufacturing investment and consumption," UBS' Hong Kong-based economist Wang Tao said yesterday.
UBS also cut its forecast for inflation next year from 4 percent to 3.5 percent. It said China may hike interest rates by one more time in the next 18 months.
Morgan Stanley last week cut China's economic growth forecast for 2012 to 8.7 percent from 9 percent. Deutsche Bank this week cut its view of economic growth this year to 8.9 percent from 9.1 percent and its outlook for 2012 to 8.3 percent from 8.6 percent.
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