China growth on the mend: Morgan Stanley

China’s economic growth is on track for a modest rebound as the impact of policy-easing measures adopted this year have started to kick in, Morgan Stanley predicted.

In a China Economics report published by the bank, it said, “We expect GDP growth to reach 8.2 percent year-on-year in 2013 and 8.0 percent in 2014.”

The bank based its forecast on the expectation that domestic demand will recover gradually as the new government eases the policy stance modestly to accommodate urbanization initiatives in 2013.

Morgan Stanley expect policymakers to loosen policies from the current level in the near term, in addition to launching long-term structural reforms to deepen urbanization.

It said the early signs of a potential growth recovery and the relative tightness in the labor market is likely to keep Chinese policymakers away from introducing drastic policy stimulus.

“As a result, we are not expecting any silver bullet in policy easing in the near future, despite the conclusion of the 18th Communist Party Congress last week,” the report said.

In a latest sign of recovery, the HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI), a measure of factory activities, bounced back to expansion territory for the first time in 13 months to stand at 50.4 in November.


Leave a Reply