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187518
Thu, 06/09/2011 - 14:41
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https://oananews.org//node/187518
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China's inflation to drop to 4 pct by end of year: IMF
By Kim Young-gyo
HONG KONG, June 9 (Yonhap) -- China's inflation rate will drop to 4 percent by the end of 2011 as the country's tight monetary policy has begun to take effect, the International Monetary Fund (IMF) said Thursday.
"Inflation should soon peak and is expected to fall to around 4 percent by year-end," the IMF said. An IMF team of experts finished an 18-day visit to China Thursday for an annual review of the country's economy.
The global lender said that the steps taken by Chinese authorities to tighten its monetary policy, normalize credit growth and withdraw fiscal stimulus are fully appropriate.
"A more balanced use of monetary policy tools, including more reliance on interest rates and less use of direct administrative limits on loan growth would help achieve the intended policy objectives more effectively," it said.
In its latest monetary policy, the People's Bank of China, the central bank, last month raised the benchmark interest rate for the second time this year and the deposit reserve requirement ratio for its major banks for the fourth time this year.
While the measures that the Chinese authorities have progressively taken to slow down the rise in real estate prices are having the desired impact, China still has a propensity for property bubbles driven by high savings, cheap financing, low carrying costs, and the lack of alternative investment instruments, the IMF warned.
"Any durable solution will need to involve broader financial development, a higher cost of capital, and increased real estate taxation," it said.
The IMF said that the Chinese economy will remain strong in 2011 and 2012 thanks to its stable domestic demand and overseas trade.
China's gross domestic product will grow at an annual rate of around 9.5 percent in the next two years, it predicted.
In 2010, China's economy expanded 10.3 percent, up from 9.2 percent the previous year. Its growth maintained strong momentum in the first quarter of this year, estimated to have grown 9.7 percent.
ygkim@yna.co.kr
HONG KONG, June 9 (Yonhap) -- China's inflation rate will drop to 4 percent by the end of 2011 as the country's tight monetary policy has begun to take effect, the International Monetary Fund (IMF) said Thursday.
"Inflation should soon peak and is expected to fall to around 4 percent by year-end," the IMF said. An IMF team of experts finished an 18-day visit to China Thursday for an annual review of the country's economy.
The global lender said that the steps taken by Chinese authorities to tighten its monetary policy, normalize credit growth and withdraw fiscal stimulus are fully appropriate.
"A more balanced use of monetary policy tools, including more reliance on interest rates and less use of direct administrative limits on loan growth would help achieve the intended policy objectives more effectively," it said.
In its latest monetary policy, the People's Bank of China, the central bank, last month raised the benchmark interest rate for the second time this year and the deposit reserve requirement ratio for its major banks for the fourth time this year.
While the measures that the Chinese authorities have progressively taken to slow down the rise in real estate prices are having the desired impact, China still has a propensity for property bubbles driven by high savings, cheap financing, low carrying costs, and the lack of alternative investment instruments, the IMF warned.
"Any durable solution will need to involve broader financial development, a higher cost of capital, and increased real estate taxation," it said.
The IMF said that the Chinese economy will remain strong in 2011 and 2012 thanks to its stable domestic demand and overseas trade.
China's gross domestic product will grow at an annual rate of around 9.5 percent in the next two years, it predicted.
In 2010, China's economy expanded 10.3 percent, up from 9.2 percent the previous year. Its growth maintained strong momentum in the first quarter of this year, estimated to have grown 9.7 percent.
ygkim@yna.co.kr
