Another cut for China's outlook

: 0 Comment(s)Print E-mail Shanghai Daily, October 26, 2011

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China's economic growth may slow to 8.5 percent next year because of stubbornly high inflation which will prevent the government from easing monetary policies while exports are likely to stay weak, Standard Chartered said yesterday.

It joined several institutions which have also cut their outlook for the economy.

"We have revised down our 2012 China real gross domestic product growth forecast to 8.5 percent from 10 percent," Stephen Green, chief economist for China at Standard Chartered, said in a research note.

The downgrade has been blamed on the high inflation and weak exports.

The Consumer Price Index, the main gauge of inflation, rose 6.1 percent annually last month, down from 6.2 percent in August and a 37-month high of 6.5 percent in July.

"China's monetary policy has not loosened in the third quarter of this year as we had expected. That said, the momentum has clearly been lost in manufacturing growth," Green said.

Chang Jian, an economist at Barclays Capital, said: "But there is unlikely to be a shift in policy stance or a broad-based easing before the Central Economic Work Conference to be held in early December."

Exports have been hit as a slowdown in the global economy has eroded demand for Chinese-made goods.

The UK-based bank estimated 12 percent of the growth in demand for China's goods and services came from overseas in 2011, a drop from about 20 percent before the current European debt crisis.

"We look for 7 percent export growth for China next year, which should be about 1 percentage point of the 8.5 percent projected China's GDP growth next year," Green said.

The World Bank, the International Monetary Fund, Goldman Sachs Group, JP Morgan Chase & Co and Credit Suisse Group have cut their outlook for China's growth this year and 2012.

China's GDP grew 9.1 percent annually in the third quarter, according to the National Bureau of Statistics.