world growth

world growth

Friday, September 23, 2011

China Economy growth rate in 2011, estimate to be 9.5%

China’s economy will indeed slow this year, but not by much and not enough to warrant fears of a hard landing.

According to the International Monetary Fund, the Chinese economy will growth a healthy 9.5% in 2011, down from 10.3% growth in 2010. That forecast suggests a relative failure of the central government to slow growth to the 7% it had targeted earlier this year. If the government is serious about slowing the economy in an effort to curb inflation and burst any sectoral bubbles, it might have to consider raising interest rates again, something the market expects to end soon.

Calls for a more flexible forex policy, letting the yuan float against the U.S. dollar, are unlikely. The yuan has been appreciating on average of 5.5% annually to about 6.5 yuan to the dollar.

The IMF warned that the overall global economy was on hair trigger alert, mostly due to the European sovereign debt crisis and the continuing need for monetary stimulus to keep the U.S. out of a recession.

The IMF predicted China’s output would slow next year to 9%.

Asia Pacific is expected to see a growth rate of 6.2% overall in 2011 and 6.6% in 2012, the IMF said Wednesday.

China would continue to outpace other economies but the average economic growth of 9% to 9.5% during 2011-2012 was less than the average of about 10.5% between 2000 and 2007. A combination of weaker international demand for made in China goods and domestic policies have cut into growth.

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