China's GDP likely to drop
17-01-2009
HSBC's Chief China Economist, Qu Hongbin, has warned that economic growth on the mainland could slip below six-percent this year if the central government fails to take strong and quick measures to prop up the economy. Mr Qu said the effect of Beijing's four-trillion yuan stimulus package announced in November would kick-in in the second half and this could boost full-year growth to 7.8 percent. Fitch Ratings also predicted that the Chinese economy could grow by less than six percent. The Head of Asian Sovereign Ratings for Fitch, James McCormack, said he expected the country's exports to contract 6 percent this year, making it the first annual decline since the 1980s. He said inflation would remain tame, giving the People's Bank of China more room to continue cutting interest rates. Mr McCormack said the cost of borrowing would decline by about 2 percent while the currency would gain 2 percent against the US dollar.
