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Monday, January 26, 2015, 15:23

UBS pegs China's 2015 growth at 6.8%

By Xinhua

 UBS pegs China's 2015 growth at 6.8%

BEIJING - China's 2015 GDP growth forecast has been maintained at 6.8 percent, as further policy support and export recovery is expected to help bolster the sluggish economy, said UBS on Monday.

"December and Q4's better than expected data will unlikely trigger any immediate significant new easing measures for now, but the first rate cut may happen (around) March or April, when even lower CPI (consumer price index) and PPI (producer price index) are reported," Wang Tao, chief China economist with UBS, wrote in a research note.

Wang added that policy support will intensify in 2015 with accelerated pro-growth measures in areas such as price, social safety net and hukou (household registration) reform, and more infrastructure projects.

Further monetary easing via liquidity provisions, including required reserve ratio cuts, is expected to offset slower foreign exchange reserve accumulation and benchmark rate cuts of at least 50 basis points (bp) are also expected to prevent real rates from rising, according to UBS.

UBS forecasts Q1 2015 gross domestic product (GDP) growth would weaken further sequentially, weighed down by the ongoing weakness of property construction and infrastructure related funding issues.

The economy is expected to pick up in Q2 as funding issues are resolved and policy uncertainties are reduced when the National People's Congress (NPC) meet in March to release key polices related to the issue.

China's GDP grew 7.4 percent in 2014, its weakest expansion in 24 years.

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