China’s 2014 growth may slow down to 7%: Report

NEW DELHI/WASHINGTON/SHANGHAI: The new government that takes charge in the country next month will not only have its hands full with issues concerning the country but must also contend with the slump in growth in China and the US. Slowing growth and unemployment have emerged as key election issues, with the opposition slamming the UPA for mismanaging the economy.A higher probability of El Nino, a weather phenomenon which hurts the southwest June-September monsoon, has already stoked concerns about the impact on overall growth and prices. Economists say this is a huge challenge for the new government which is expected to hit the ground running to revive growth and sentiment.
US data showed that in the first quarter, exports tumbled and businesses accumulated stocks at the slowest pace in nearly a year. The Gross Domestic Product expanded at a 0.1% annual rate, the slowest since the fourth quarter of 2012, the commerce department said on Wednesday. That was a sharp pullback from the fourth quarter’s 2.6% pace and was worse than economists’ expectations of a 1.2% rate.
Separate data showed the Chinese Academy of Social Sciences (CASS), a top government think tank, had revised China’s 2014 GDP growth forecast down to 7.4%, below the official 7.5% target, and said growth could slow down to as low as 7%. The downward revision follows signs that China’s economy had slowed down more than expected in the first quarter.
The official China Securities Journal quoted the report, published on Tuesday, as saying that the country’s economic growth would continue to be driven by investment, but warned that excess production capacity and heavy local government debt burdens would slow fixed asset investment.