IMF forecast to not stall China’s growth target - economists

23 April 2009 10:11  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s economic growth target of 8% in 2009 will not likely change despite a recent International Monetary Fund (IMF) forecast of lower growth this year for the country, economists said on Thursday.

“The 8% economic growth target is not a big problem for achieving this year. I think we could say now China’s economy is bottoming out and recovering along with the economic stimulus package paying off,” said Li Jianfeng, an economist with Shanghai-based Shanghai Securities.

“Some indices also show the economic situation is turning better,” said Li.

The purchasing managers' index (PMI), an indicator of the economic health of the manufacturing sector, rose for the fourth straight month in March to 52.4%. A reading of above 50% suggested the expansion, while one below 50% indicates contraction.

Exports, a key driver for China’s economic growth, fell in March, though at a slower pace year on year. However, the export decline will not show quick signs of improvement in the wake of decreasing overseas demand from the US and Europe, according to economist Zhang Han from Guotai Junan Securities.

“The quarter-on-quarter GDP in 2009 will expand gradually, according to my forecast,” said Zhang.

According to Shanghai Securities’ Li, China’s GDP in quarters two, three and four would be at around 6.5%, 7% and 8% respectively.

Last week, China reported an annual economic expansion of 6.1% in the first quarter, which marked a quarter-on-quarter recovery despite being the slowest annual pace for any quarter on record, analysts said.

The government would not likely unveil a second stimulus package this year as it tries to cope with the present economic situation and nurture the effects of the first stimulus package, said Guotai Junan Securities’ Zhang.

In early March, Premier Wen Jiabao said China would be able to achieve the economic growth target of about 8% in 2009 if it pursued proper policies and measures.

Mr Wen had been quoted as saying that China had gathered sufficient “ammunition” to combat the economic crisis.

China's economy, the world's third largest, expanded 9% last year, the first year of single-digit growth since 2003.

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