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OECD foresees single-digit growth for China

(China Daily)

08:16, November 01, 2011

VIENNA - China is likely to say farewell to double-digit economic growth during the 2011-13 period, with next year's projection down to 8.6 percent, according to a report by the Paris-based Organization for Economic Cooperation and Development (OECD).

Amid worsening US and eurozone crises, the OECD said on Monday that this year China's economy will achieve 9.3 percent growth, down from last year's 10.4 percent. In 2013, China's economy will bounce back to 9.5 percent growth.

The OECD didn't elaborate on the reasons for China's economic slowdown. But it is very clear that the contracted global growth resulting from the eurozone debt crisis and US fiscal problems have been hindering China's economy, which still heavily depends on trade and investment.

Presenting a special briefing note ahead of the G20 Cannes Summit and urging G20 leaders to take bold action to get the global economy back on track, OECD Secretary-General Angel Gurria said on Monday in Paris that without decisive action the picture looks gloomy.

The OECD said that the eurozone's economy will grow at 1.6 percent, 0.3 percent and 1.5 percent for 2011, 2012 and 2013, while in the United States the annual growth rate will be 1.7 percent, 1.8 percent and 2.5 percent.

Gurria said eurozone leaders must "promptly and forcefully" implement the debt and banking crisis rescue plan announced by EU leaders on Oct 26.

In Cannes, G20 leaders will discuss an action plan containing commitments for mutually reinforcing macroeconomic policies and structural reforms.

"In 2008, G20 leaders rose to the challenge with a clear and coherent plan and we avoided a second Great Depression," said Gurria.

"Today, the adoption and implementation of the action plan is just as imperative to restore confidence through decisive actions in specific countries and regions," said Gurria.

He said uncertainties have risen dramatically in recent months.

"A number of events, notably related to the euro area debt crisis and fiscal policy in the United States, are likely to dominate economic developments in the coming two years," said Gurria.

He said a better upside scenario can materialize if the policy measures that were announced at the Euro Summit of Oct 26 are implemented promptly and forcefully.

The OECD also said strong, credible medium-term frameworks for fiscal consolidation and durable growth are needed to restore confidence in the long-term sustainability of public finances and to build budgetary space to deal with short-term economic weakness. Advanced economies with sounder public finances can provide additional counter-cyclical support.

It also said that structural reforms are essential to boost the growth potential of G20 countries, to tackle high unemployment and to rebalance global demand.

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