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CICC raises China growth forecast for 2018

Updated: Oct 31,2017 9:52 AM     cgtn.com

A leading Chinese investment firm on Oct 30 raised its forecast for China’s economic growth in 2018, citing optimism on consumption and investment in property and manufacturing.

The China International Capital Corporation (CICC) raised its forecast for China’s 2018 real GDP growth to 6.9 percent year-on-year, compared with the current consensus forecast of 6.4 percent, according to a report from the company.

“We are more optimistic on the growth of consumption, property investment, and manufacturing capex (capital expenditure) compared with the consensus view,” the report said.

The consumer price index, a main gauge of inflation, is predicted to rise 2.5 percent in 2018, up from 1.6 percent in 2017.

Due to sustained reflation and declining real interest rates, the monetary policy will likely continue to withdraw stimulus, according to the CICC.

While excluding benchmark interest rate changes and reserve requirement ratio adjustments from its forecast, the company expected market rates to continue to trend up next year.

“Fiscal policy will likely remain accommodating, with the focus shifting further towards improving income distribution and mobilizing ‘idle resources’,” the report said.

On the structural reform front, further progress is expected in boosting the quality and sustainability of growth, it noted.

Main uncertainties will be a more-hawkish-than-expected monetary policy setting domestically and abroad, as well as a sharper-than-expected property market correction, according to the report.

For 2019, the CICC expects real GDP growth to remain robust at 6.8 percent.

Major international institutions and investment banks, including the IMF and the World Bank, have raised their forecasts for China’s growth this year.

In a report released earlier this month, the IMF raised its forecast for China growth for the fourth time this year, predicting China’s economy to grow 6.8 percent this year and 6.5 percent next year, both 0.1 percentage points higher than previous forecasts.

China’s GDP expanded 6.9 percent in the first three quarters compared to the same period last year, holding steady from a 6.9 percent growth in the first half despite a slightly slower 6.8 percent increase in the third quarter, official data showed.

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