China's GDP to Hover at 7-8 Percent Despite War: Expert

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Last updated at: (Beijing Time) Monday, March 03, 2003

China's GDP to Hover at 7-8 Percent Despite War: Expert

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Despite the possible outbreak of a Gulf war affecting world economy, China's economic growth should still attain 7 percent to 8 percent, according to the latest edition of equity research from Salomon Smith Barney.

"The official GDP growth forecast is 7 percent to 8 percent this year, compared with our forecast of 7.6 percent and last year's 8 percent. This is based on the assumption of a 'benign' and quick war in Iraq," said the China section of the report, which was compiled by Huang Yiping of the equity researcher's Hong Kong office.

However, in a worse scenario, with a probability of 5 percent to 10 percent, the United States' GDP growth could drop to -3 percent to -4 percent in the first two quarters and oil prices could surge to 80 US dollars per barrel. Such a scenario could push down China's GDP to 5.5 percent from the current baseline of 7.6 percent, without considering possible further fiscal and monetary stimulation, Huang predicted.

He said in the current world economic scenario, many officials of various governments in general are concerned about a growth slowdown this year.

"This further supports caution on currency revaluation. Trade officials, in particular, are wary that a strengthening currency could kill the dynamic export sectors that already have very narrow margins," Huang said.

However, in the Asia Pacific economic weekly summary part of the latest report, it said, "We argue that China will remain a safe haven in terms of growth performance."

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