CHINA TO SLASH RATES, SPEND TO FUEL GROWTH, MORGAN STANLEY SAYS
Kevin Hamlin
Bloomberg, October 7, 2008
China will cut interest rates as many as five times by the end of 2009 and will step up spending to limit the effect of the ``global financial tsunami'' on the nation's economic growth, Morgan Stanley said.
The central bank will cut borrowing costs by 27 basis points each time, reducing the one-year lending rate to as low as 5.85 percent next year from 7.2 percent now, Qing Wang, a Hong Kong- based economist, said in a note today. Government spending may add as much as 3 percentage points to economic growth, he said.
Global growth is slowing after the collapse and bailout of banks in the U.S. and Europe propelled the cost of borrowing in money markets to the highest ever. Slowing economic growth in Europe and the U.S., which account for 40 percent of China's total exports, will translate into lackluster exports, falling corporate profit and easing inflation, Wang said.
“A substantial improvement in the inflation outlook should help ease the lingering concerns about the inflationary consequences of an expansionary macroeconomic policy,” Wang said. “We expect a decisive policy shift toward boosting growth in the coming weeks and months.”
Wang cut his forecast for inflation next year to 2.5 percent from 4 percent. He lowered his estimate for economic growth in China next year to 8.2 percent from 9 percent and lowered his forecast for this year to 9.8 percent from 10 percent.
Kevin Hamlin
Bloomberg, October 7, 2008
China will cut interest rates as many as five times by the end of 2009 and will step up spending to limit the effect of the ``global financial tsunami'' on the nation's economic growth, Morgan Stanley said.
The central bank will cut borrowing costs by 27 basis points each time, reducing the one-year lending rate to as low as 5.85 percent next year from 7.2 percent now, Qing Wang, a Hong Kong- based economist, said in a note today. Government spending may add as much as 3 percentage points to economic growth, he said.
Global growth is slowing after the collapse and bailout of banks in the U.S. and Europe propelled the cost of borrowing in money markets to the highest ever. Slowing economic growth in Europe and the U.S., which account for 40 percent of China's total exports, will translate into lackluster exports, falling corporate profit and easing inflation, Wang said.
“A substantial improvement in the inflation outlook should help ease the lingering concerns about the inflationary consequences of an expansionary macroeconomic policy,” Wang said. “We expect a decisive policy shift toward boosting growth in the coming weeks and months.”
Wang cut his forecast for inflation next year to 2.5 percent from 4 percent. He lowered his estimate for economic growth in China next year to 8.2 percent from 9 percent and lowered his forecast for this year to 9.8 percent from 10 percent.
(...) [artículo aquí]
Posts
No comments:
Post a Comment