Morgan Stanley, Deutsche Bank Cut Forecasts for China Growth
China Economic Growth Forecasts Cut
Forbes Conrad/Bloomberg
China is the world’s biggest exporter and also the largest contributor to the global economic expansion.
China is the world’s biggest exporter and also the largest contributor to the global economic expansion. Photographer: Forbes Conrad/Bloomberg
Aug. 16 (Bloomberg) -- Paul Cavey, a Hong Kong-based economist with Macquarie Securities Ltd., talks about China's economy, central bank monetary policy and currency. Cavey speaks from Taipei with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Morgan Stanley (MS) and Deutsche Bank AG cut estimates for China’s economic growth as the debt burdens and elevated unemployment of developed nations threaten demand for exports.
Morgan Stanley cut a forecast for next year to 8.7 percent from 9 percent, in an e-mailed note today. Deutsche Bank lowered a prediction for this year to 8.9 percent from 9.1 percent, in a report yesterday.
China’s trade growth will slow in the second half and fiscal tightening in Western nations means their demand will wane, Commerce Minister Chen Deming said yesterday in Hong Kong. The nation is the world’s biggest exporter and the largest contributor to the global economic expansion.
“Europe’s slow and inadequate response to sovereign stress” and the prospect of more fiscal tightening in Europe and the U.S. will limit growth in developed nations, Morgan Stanley analysts including Chetan Ahya wrote in the note. “Emerging markets including China are unlikely to stay completely unaffected from these developments.”
The Shanghai Composite Index fell for a third day, slipping 0.2 percent as of 10:06 a.m. local time.
China’s economy expanded 9.5 percent in the second quarter from 9.7 percent in the first three months of this year, maintaining momentum even after the government raised interest rates and stepped up curbs on the housing market. Companies from Volkswagen AG to McDonald’s Corp. are relying on sales in the world’s fastest-growing major economy.
Morgan Stanley left its 2011 growth forecast unchanged at 9 percent.
China may rely more on fiscal policy than monetary measures to support growth, Morgan Stanley economists said. Fiscal boosts may include support for social housing construction and incentives for consumer spending, they said.
To contact the reporter on this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at ppanckhurst@bloomberg.net
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