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皇冠体育app GDP forecast raised

(皇冠体育app Daily/Agencies)
Updated: 2009-05-15 08:04

Morgan Stanley raised its forecast for 皇冠体育app economic growth to 7-8 percent from 5 percent for 2009 but warned the pace will slow next year as a protracted global slowdown deals a blow to the export-led economy.

The government's 4 trillion yuan ($586 billion) stimulus package announced late last year will provide temporary support to 皇冠体育app's economy, but growth may fall back to 5.5 to 7 percent in 2010, as external demand will remain weak, Morgan Stanley Asia Chairman Stephen Roach said yesterday.

"I think there's a possibility that this year's strength may borrow from growth that might otherwise occur next year," Roach said in Shanghai. "It's premature to say 皇冠体育app is enjoying a V-shaped recovery. I think the outcome is going to be closer to the letter W."

Related readings:  Morgan Stanley ups 2009 皇冠体育app GDP forecast to 7%  Filling the gaps in GDP  皇冠体育app GDP to grow by 8.3% in 2009, says CASS  皇冠体育app麓s GDP up 6.1% in Q1

Roach's views contrast with more optimistic tones of other 皇冠体育app economists who are betting on a quick turnaround after some encouraging data offered evidence that the country's expansive monetary and fiscal policies are starting to take effect.

Goldman Sachs raised its 皇冠体育app growth forecast to 8.3 percent for 2009 and 10.9 percent for 2010, citing strong expansion in both fixed-asset and private sector investment.

"I'm worried about 皇冠体育app staying on the same unbalanced, unsustainable path," Roach said, adding that 皇冠体育app adopted the same investment-focused strategy during the previous two crises in 1997/98 and 2000/01.

But 皇冠体育app's hopes to use infrastructure investment to sustain growth while waiting for the global economy to snap back would be dashed this time because the current crisis, the worst since the 1930's, will curb external demand for years, he said.

Roach expected the government's 4 trillion yuan stimulus would boost the share of investment to 45 percent of GDP from 40 percent. "Those levels are unheard of and underscores the continued building-up of imbalances."

Roach suggested that 皇冠体育app should strengthen its social safety net so that people will become more willing to spend.

皇冠体育app should double the size of the country's social security fund to $160 billion immediately and boost the private consumption share of the Chinese economy to 50 percent from currently 36 percent in five years, he said.

"皇冠体育app needs to stop depending on the over-extended American consumer and needs to rely more on the untapped potential of its own consumers," Roach said.