OECD May Cut China Growth Forecast to as Little as 6%
The Organization for Economic Cooperation and Development may cut its forecast for China’s economic growth this year to as little as 6 percent because of the deepening global slump, Secretary-General Angel Gurria said.
In November, the estimate was 8 percent. The revised forecast, to be issued March 31, will be between 6 percent and 7 percent, Gurria said at a briefing in Beijing today.
The World Bank reduced this week its forecast for growth in the world’s third-biggest economy to 6.5 percent as exports tumble and the government rolls out a 4 trillion yuan ($585 billion) stimulus plan. Gurria echoed warnings from the lender and the International Monetary Fund that the world economy will contract after the U.S., Japan and Europe sank into recessions.
“Growth of 6 percent to 7 percent would still be the envy of just about every other country,” said David Cohen, an economist at Action Economics in Singapore. “Things would be that much worse without China holding the fort.”
China’s growth has slowed from 13 percent in 2007 to 6.8 percent in the fourth quarter of last year as factories close, eliminating the jobs of millions of migrant workers and increasing the risk of social unrest.
Expansions in China and India won’t be enough this year to offset contractions in economies including the U fast cash online.S., Japan, Germany, the U.K. and Italy, Gurria said. The OECD’s 30 members will have “very negative growth.”
Economic ‘Repair Shop’
The “traditional locomotives” of global growth, such as the U.K., Germany and Japan, are in the repair shop having their engines retooled, Gurria said. “We need more locomotives.”
The IMF estimates that China’s economy will expand 6.7 percent this year. Premier Wen Jiabao said last week that the government’s 8 percent target was “difficult but possible” to achieve.
The Chinese economy will grow more strongly in 2010 than this year, as stimulus spending has a bigger effect, Gurria said. The government’s plan includes investment in roads, power grids, pipelines and low-cost housing.
The World Bank said in its quarterly report on China this week that it saw “early signs” that the economy is stabilizing. The nation is weathering the global slowdown better than many countries because its banks were largely unscathed by the financial crisis and the government quickly implemented the stimulus, it said.
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