HSBC cuts 2015 China growth forecast

0 Comment(s)Print E-mail Xinhua, May 27, 2015
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HSBC cut its forecast for China's 2015 GDP growth to 7.1 percent from 7.3 percent and raised the expected interest rate cut forecast from 25 basis points (bps) to 50 bps on Wednesday.

The adjustment comes as exports registered weaker-than-expected growth so far this year, a reflection of softer external demand and a stronger yuan. More aggressive easing policies are needed to support growth, HSBC chief China economist Qu Hongbin said in a report to clients.

The bank expected China's economic growth to slow further to 6.8 percent in the second quarter of the year, from a six-year low of 7 percent in the first quarter, but rebound to 7.1 percent in the third quarter and 7.2 percent in the fourth quarter.

HSBC lowered its forecast for China's export expansion this year to 4.2 percent from previous 7.1 percent.

Qu noted continued economic weakness would prompt more aggressive easing measures in the second half of 2015, expecting 50-bps reserve requirement ratio (RRR) cut to take place toward the end of second quarter, another 200-bps RRR cut and 50-bps interest rate cut in the second half this year.

In addition to monetary easing policies, Qu also expected the country to start municipal bond issuance to reduce the financing burden for longer-term infrastructure investment projects.

To stabilize the economic growth, China's central bank has cut the benchmark interest rate three times since November. It also lowered the RRR for commercial banks twice, in February and April. Endi

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