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UPDATED: June 29, 2012 Web Exclusive
Slower Growth but Still a Soft Landing
America's largest financial institution forecasts stable growth in China
By Huang Wei
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Bank of America Merrill Lynch Global Research has lowered China's GDP growth forecast from 8.6 percent to 8 percent, but remains confident of relatively stable real growth in investment and retail sales this year.

The downgrade is attributed to slowing export growth because of worsening external demand, said analysts of the top ranked research house in a press conference on June 27 in New York City.

According to their mid-year review report, China will likely still see a soft landing, with lower chances of a hard one. With the government stepping up efforts to support growth, GDP growth is expected to dip to 7.6 percent, before rebounding to 8 percent in the third quarter and 8.2 percent in the fourth quarter.

Statistics show that current inflationary pressures continue to soften in China, due to declining commodity prices and slower domestic demand growth. Easing inflation could provide the central bank more monetary room for policy easing, said Michelle Meyer, the institute's senior U.S. economist.

The largest financial institution in America expects further policy easing to bolster growth, with the Chinese Government shifting the focus to growth in mid May. They could speed up more projects, make projects financing easier with a lower RMB deposit-reserve ratio and interest rates, approve more enterprises bonds, and lift more lending restrictions, the report predicted.

(Reporting from New York City)



 
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