‘Deteriorating eurozone crisis may slow Chinese economy’August 25th, 2012 - 2:39 pm ICT by IANS
Singapore, Aug 25 (IANS) A further deterioration in the eurozone debt crisis could slow China’s economic growth, a team of economists said in a report.
The economists from the National University of Singapore and China’s Xiamen University projected a growth of 7.68 percent for the Chinese economy this year, followed by 8.93 percent in 2013, reported Xinhua that cited the report released Friday.
The forecasts were based on the latest projections by the International Monetary Fund (IMF) for the eurozone and the US. The eurozone is expected to contract by 0.3 percent this year and grow by 0.7 percent next year, whereas the US economy is expected to grow by 2 percent and 2.3 percent, respectively.
Decisive actions are expected of the eurozone political leaders to prevent the crisis from deteriorating, and of the US congress to manage to avoid the potential “fiscal cliff”. Based on such assumptions, the Chinese economy is forecast to grow 7.47 percent in the third quarter this year and 7.52 percent in the fourth quarter.
This is in comparison with the growth of 7.6 percent in the second quarter, which was the slowest in three years.
However, if the eurozone leaders failed to reach the much needed consensus, leading to a contraction of 0.5 percent for the eurozone this year and a contraction of 0.3 percent next year, China’s economic growth is projected to be slowed further to 7.56 percent this year and 8.22 percent next year.
These represent a further slowdown of 0.12 percentage point this year and 0.71 percentage point next year.
“The potential recession in the eurozone both this year and next year is expected to deal a blow to China’s exports, especially the exports to the eurozone, which will fall by 11 percent. This will reduce China’s economic growth by some 0.7 percentage point,” said Chen Kang, a professor from the Lee Kuan Yew School of Public Policy, National University of Singapore.
Chen led the research together with Lai Xiaoqiong, a professor from the Wang Yanan Institute for Studies in Economics, Xiamen University.
Nevertheless, Chen said such a slowdown is not anything huge for the Chinese economy, which has been growing at around 10 percent per year over the past decades.
“One of the reasons is that the exports to other regions such as the United States will still see growths, though the exports to the eurozone will fall. A second reason is that the export prices have been relatively stable,” he said.
The team projected a growth of 7.03 percent for China’s domestic consumption this year.
The fixed asset formation will grow by 7.83 percent and the exports will grow by 8.57 percent, while imports will grow by 7.08 percent.
The consumer price index (CPI) inflation will slow further to 1. 73 percent in the third quarter before rebounding slightly to 1.88 percent in the fourth quarter. The full-year CPI inflation will average 2.55 percent this year, followed by 2.42 percent next year.
Lai said China’s growth of 7.8 percent in the first half of this year is still “remarkable” given the current global economic conditions and remains above the official growth forecast of 7.5 percent announced at the beginning of the year.
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- China's economy to grow 8.2 percent in 2012: WB (Lead) - Apr 12, 2012
- China's economy to grow 8.2 percent this year: World Bank - Apr 12, 2012
- Crisil cuts India's growth forecast to 5.5 percent - Aug 07, 2012
- China's economy expected to pick up - Jul 26, 2012
- World Bank sharply lowers global economic growth rate (Lead) - Jan 18, 2012
- China's GDP growth to slow to 8.6 percent - Dec 18, 2011
- India showed strong growth amid global slowdown: IMF - Mar 15, 2012
- India growth increased strongly in Q4: IMF - Mar 14, 2012
- China's manufacturing sector growth slows - Aug 01, 2012
- Crisil cuts India's economic growth forecast to 6.5 percent - Jun 04, 2012
- Singapore forecasts up to 3 percent growth for 2012 - Nov 21, 2011
- Pacific region's economic growth to slow down: ADB - Mar 13, 2012
- China's manufacturing activity slows to nine-month low (Lead) - Sep 01, 2012
Tags: chen kang, chinese economy, contraction, debt crisis, decisive actions, economic growth, international monetary fund, international monetary fund imf, lee kuan yew, lee kuan yew school, lee kuan yew school of public policy, national university of singapore, percentage point, political leaders, recession, slowdown, university of singapore, us congress, xiamen university, xinhua