Thursday, January 13, 2011

Agricultural Bank of China, Deutsche Bank forecast report released in China this year will be from high to low price

 Agricultural Bank of China and Deutsche Bank recently published a report on China's macro economy in 2011, the two agencies agreed that China's CPI in 2011 will show a trend from high to low, while China's economic growth will slow.

Second-quarter price increase will be higher

The central bank has price stability as the primary task of macroeconomic control. For this year's CPI movements, Hu Xinzhi ABC Strategy Management Department, said the second quarter of 2011, higher price inflation, some may be more than 5% in January, then gradually dropped the second half of the year at 4.3% or so. The main reason is that the price of pork rose into the low cycle; arrival rate hike cycle, living under the driving will be slow.

Jun Ma, chief economist for Greater China at Deutsche Bank believes that this year's CPI in the second quarter, an increase of 5% -6% of the high points in the second half slowed to around 3% -4%.

Ma pointed out, however, can not rule out a number of upside risks to lead to greater inflationary pressures, if the first half of the policy tightening is not enough, because inflation is expected to accelerate the velocity of money circulation, climate anomalies could lead to upward price of agricultural products, international commodity prices continue to rise, etc. than-expected CPI growth and then promote.

Infrastructure investment growth will slow down

ABC believes that China's economic growth in 2011 will slow down, but still maintain a rapid level of growth in 2011 GDP was 9.5%. Ma's forecast is relatively conservative, he believes that GDP growth this year, China 8.7%, mainly due to export growth over 30% from last year dropped to 15% this year, fixed-asset investment growth decreased from 23% last year to This year's 20%. Investment in fixed assets investment in infrastructure will significantly slow down the growth, but investment in affordable housing may be increased by 100%.

Fixed asset investment growth and export growth were to slow, Hu Xinzhi also agreed, but he also believes that investment in transition will take over real estate investment has become the main investment this year, affordable housing and high-speed rail investment in new green space will be .

Brought about by the economic slowdown fears Ma believes that the short term, China's economy is the biggest challenge currently facing inflation, the Chinese economy slowing to 7% if only worth worrying about.

It is necessary to continue raising interest rates

ABC pointed out that monetary policy in 2011 will be more focused on management of inflation expectations and price stability, fiscal policy will be more focused on economic restructuring. The year 2011, interest rates 2-3 times more likely, interest rates in the range of between 50-75 basis points. But he also believes that the past few prices to see monetary policy cycle, the central bank is more inclined to use the reserve ratio means the statutory deposit reserve ratio is expected to increase 3-5 times. Gradual appreciation of RMB will remain a small trend. Under the Guidance of prudent monetary policy in 2011, 7 trillion of credit increments between -7.5 trillion more likely.

Ma is expected this year will continue to raise the deposit reserve several times, raising interest rates 75 basis points, 4% -5% appreciation of the renminbi. Efforts focused on a tight first half. Ma said that in the first half of the inflation process to continue upward, due to the uncertainty of inflation itself and the resulting tightening of policy uncertainty, the stock market will face greater resistance.

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