Economy

Morgan Stanley forecasts China's economy to expand over 10%

(Xinhua)
Updated: 2010-07-19 11:15

HONG KONG - Hong Kong-based Morgan Stanley's chief Asia economist, Wang Qing said he was relatively optimistic about China's economic outlook and the world's third largest economy was expected to expand by more than 10 percent this year.

In a recent interview with Xinhua, Wang said China's consumer price index (CPI), the main gauge of inflation, was likely to peak in July at 3.5 percent to 3.6 percent. For the entire year of 2010, he forecast the CPI to stand at around 3 percent.

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China's economic growth in the second quarter this year slowed down to 10.3 percent, which fell within Morgan Stanley's expectation made early this year, said Wang, who attributed the slowdown to waning effects of the Chinese government's stimulus package and the increasingly higher quarterly comparative bases in 2009.

He expected China's growth to continue slowing down in the second half, with the third quarter to expand by about 10 percent and the fourth quarter at about 9 percent or even lower.

The economist attributed the accelerating slowdown in China's economy to a simultaneous slowdown in the U.S. and European economies, as well as China's measures to cool down the property market.

Wang maintained it was not of much significance regarding a slowdown and what really mattered was that whether the growth rates fell within expectations and within an acceptable range.

As inflation expectations started to go lower, Wang said there could be little possibility for the People's Bank of China, or the central bank, to raise the interest rate in the near future. He also expected Chinese financial institutions to meet their target of 7.5 trillion yuan (US$1.11 trillion) in new loans for 2010.