ADB predicts slower growth for mainland

PUBLISHED : Thursday, 07 April, 2011, 12:00am
UPDATED : Thursday, 07 April, 2011, 12:00am


The mainland's economic growth is expected to slow to 9.6 per cent this year and 9.2 per cent next year because of easing exports and investments, the Asian Development Bank forecasts.

For Hong Kong, it expects the gross domestic product to settle back to more sustainable growth of around 5 per cent this year and 4.7 per cent next year, after the rebound of 6.8 per cent last year.

In its annual report, the ADB said the mainland - with 10.3 per cent growth last year - would see a slowdown in exports and industrial output as demand from major markets remained sluggish and tax rebates on some export products expired.

The Manila-based multilateral bank said merchandise export growth would ease to about 20 per cent this year and 18 per cent next year, compared with the nearly 30 per cent average seen in the five years before the global recession.

Fixed-asset investment would remain a key driver for the mainland's growth over the next two years, the bank said, though the rate of expansion is set to decelerate slightly from past levels because of the winding down of the fiscal stimulus and a tighter monetary policy.

Rising inflation would be a concern for the mainland, the bank said. Inflation would jump to 4.6 per cent this year from 3.3 per cent last year as a result of excess liquidity and high food and commodity prices, but ease back to 4.2 per cent next year as commodity prices levelled off.

Rhee Changyong, the bank's chief economist, said the mainland's recent interest rate increase to curb inflation was within expectations and there was room for a further increase.

Pointing out that the government had put more emphasis on domestic consumption and services in its 12th five-year plan, the ADB report said private consumption would expand by 12.6 per cent this year because of rising incomes and spending on education, health care and pensions.

'Global imbalances have become more pronounced, and the recent recession highlighted the risk of heavy reliance on foreign demand for growth,' Rhee said.

For quake-hit Japan, the bank projected 1.5 per cent GDP growth this year and 1.8 per cent next year.

'Aside from energy, the regional and global impact of the Japanese earthquake is hard to quantify but are likely to be temporary and limited,' the report said. Rhee said that if the nuclear crisis does not deteriorate further, the economic impact on other Asian countries would be small.

The report predicted Asia overall would continue to expand solidly at 7.8 per cent and 7.7 per cent this year and next year.

Small talk

Mainland exports and industrial output are expected to slow down

The ADB predicts merchandise export growth will ease to 20 per cent this year compared with an average of: 30%

Inflation is expected to jump to 4.6 per cent this year from last year's: 3.3%