Slowing Growth Raises Risk Of Policy Missteps

July 2008 | Economic Analysis

China's red hot economy continues to gradually cool on the back of a weaker performance of exports and official monetary tightening efforts, with real GDP growth slowing for the fourth consecutive quarter in Q208 to 10.1% y-o-y - its weakest outturn since Q405. This has forced us to revise down our 2008 economic growth forecast for China, and we now expect full-year growth to come in at 10.1%, down from our original 10.7% prediction. However, with the pace of economic expansion continuing to slow, risks of monetary easing to support growth are now on the rise, a development which could severely impact medium-term macroeconomic stability.

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