August 10, 2009 - 8:06am
Goldman Sachs chief economist for non-Japan Asia, Michael Buchanan said on Monday that the bank revised its projections for gross domestic product growth in Asia ex-Japan, which were already above consensus, to 5.6 % from 4.9 % this year and to 8.6 % from 7.8 % in 2010.
Goldman said Asia would benefit from strength in China, which it now expects to grow 9.4 % this year and 11.9 % in 2010. Previously the bank had forecast 8.3 % and 10.9 %, respectively. Explaining its upgrade, the bank said Chinese growth momentum remained strong and policy tightening was behind the curve.
Furthermore, Buchanan said the National Development and Reform Commission and the State Council, China's cabinet, remained very cautious about any significant tightening. This may mean that increases in interest rates will not come until next year, perhaps after discussions at December's annual economic policy-setting meeting, he added.
Premier Wen Jiabao said at the weekend that Beijing would stick to an appropriately loose monetary stance and proactive fiscal policy to achieve its goal of 8 % GDP growth this year. That target looked out of reach until data for the second quarter started to show the impact of the government's 4 trillion yuan ($585 billion) stimulus spending and a record burst of lending by China's mainly state-owned banks.
In addition, Goldman Sachs said that Asia would also draw strength from a rosier outlook in the United States. The bank also raised its 2009 GDP forecasts for Hong Kong, Malaysia, the Philippines, Singapore, South Korea and Taiwan, but kept its projections for Indonesia, Thailand and India unchanged.
Goldman said Asia would benefit from strength in China, which it now expects to grow 9.4 % this year and 11.9 % in 2010. Previously the bank had forecast 8.3 % and 10.9 %, respectively. Explaining its upgrade, the bank said Chinese growth momentum remained strong and policy tightening was behind the curve.
Furthermore, Buchanan said the National Development and Reform Commission and the State Council, China's cabinet, remained very cautious about any significant tightening. This may mean that increases in interest rates will not come until next year, perhaps after discussions at December's annual economic policy-setting meeting, he added.
Premier Wen Jiabao said at the weekend that Beijing would stick to an appropriately loose monetary stance and proactive fiscal policy to achieve its goal of 8 % GDP growth this year. That target looked out of reach until data for the second quarter started to show the impact of the government's 4 trillion yuan ($585 billion) stimulus spending and a record burst of lending by China's mainly state-owned banks.
In addition, Goldman Sachs said that Asia would also draw strength from a rosier outlook in the United States. The bank also raised its 2009 GDP forecasts for Hong Kong, Malaysia, the Philippines, Singapore, South Korea and Taiwan, but kept its projections for Indonesia, Thailand and India unchanged.