China’s central bank, the PBOC, has just announced a swathe of downgrades to its 2015 economic forecasts, including GDP growth.
The bank now expects the Chinese economy to grow 7.0% in 2015, down from 7.1% earlier in the year, while consumer price inflation is forecast to increase by just 1.4%, well below the 2.2% pace seen previously.
Here’s the statement released by the PBOC this afternoon.
It says:
“Since December last year, both the domestic conditions of and external environment for the Chinese economy have experienced a number of changes. This report provides the mid-year update of our China macroeconomic forecast for 2015. Although GDP growth in the first half of this year has been weaker than expected, we have reasons to expect some modest recovery in sequential growth in the second half of this year. Compared with our forecast published in December last year, we revise down our 2015 full-year GDP growth forecast to 7.0% (from 7.1%), cut our CPI inflation forecast to 1.4% (from 2.2%), and raise the forecast for current account balance/GDP ratio to 2.9% (from 2.4%)”.
Other notable revisions are listed below. All are for the full calendar year with prior forecasts bracketed.
- Export growth +2.5 (+6.9%)
- Import growth -4.2% (+5.1%)
- Fixed asset investment +12.6% (+12.8%)
- Producer price inflation -4.2% (-0.4%)
Unsurprisingly Chinese stocks have reacted positively to the downgrades – lower growth and inflation only increases the likelihood of further stimulus measures. The Shanghai Composite is now up close to 1% with gains in Shenzhen nearing 3%.
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