The chief economist for China’s central bank forecasts that the economy will grow 6.8 per cent in 2016, well ahead of independent estimates from the International Monetary Fund and most private economists. After a bout of currency depreciation and weak data earlier in the year, sentiment towards China has improved in recent weeks as the latest data suggest government stimulus efforts have helped prevent a sharp fall-off in investment. In its semi-annual economic forecast published late on Wednesday, the People’s Bank of China’s research bureau forecast that growth will fall comfortably within the government’s target range of 6.5 per cent to 7 per cent and close to last year’s 6.9 per cent.
The IMF and Asian Development Bank both forecast 6.5 per cent growth for this year. Growth projections by private economists average 6.7 per cent for the second quarter, according to a Reuters poll, following 6.8 per cent growth in the first three months. “The strength of fiscal policy has been increased, and real estate and infrastructure investment have accelerated, but private investment remains weak,” the research bureau, led by China economist Ma Jun, said in its report. The bureau’s forecasts do not represent the PBoC’s official view. Mr Ma was formerly chief China economist at Deutsche Bank. The new forecasts come as inflation data on Thursday showed wholesale price deflation pressures easing in May, a positive sign for China’s struggling manufacturing sector. The producer price index, which measures prices at the factory gate, fell 2.8 per cent in May from a year earlier, an improvement on April’s 3.3 per cent contraction.