China Productivity Jolt Urged As Growth Forecasts Cut: Economy
Credit Suisse Group AG (CSGN) and Deutsche Bank AG reduced forecasts for China’s growth this year as weakness in exports and in investment drag on the world’s second-biggest economy.
Credit Suisse reduced its estimate to 7.7 percent from 8 percent, while Deutsche Bank lowered its forecast to 7.9 percent from 8.2 percent, according to e-mailed research notes received today. The predictions indicate the weakest growth since 1999 and compare with a 9.2 percent expansion last year.
The Credit Suisse forecast matches that of JPMorgan Chase & Co., while Deutsche sees a 7.9 percent expansion and Goldman Sachs Group Inc. last month estimated 8.1 percent. All of the estimates indicate the weakest growth since 1999. Photographer: Nelson Ching/Bloomberg
June 14 (Bloomberg) -- Frederic Neumann, Hong Kong-based co-head of Asian economic research at HSBC Holdings Plc, talks about global economies and financial markets. He speaks with Mia Saini on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
Corporate profits are falling, deflation is looming and the nation faces years of “weak” growth, Credit Suisse economist Tao Dong said. To unleash productivity gains and restore the economy’s strength, the government should break monopolies in banking and utilities, open the services industry, and deregulate interest rates and the exchange rate, he said.
“Investment is unlikely to see a meaningful rebound in the foreseeable future,” Hong Kong-based Tao said. “Government stimulus could moderate the downside risks to growth and perhaps cushion the down-cycle, but we do not see it providing sustainable upward growth momentum.”
The cuts to the forecasts and a downgrade in Spain’s credit rating by Moody’s Investors Service yesterday sent Asian stocks lower. The MSCI Asia Pacific Index slid 0.3 percent as of 2:05 p.m. in Tokyo.
