Economists at China’s central bank have sharply lowered their inflation forecast for 2015, while predicting a pick up the world’s second-biggest economy during the next six months thanks to more stable home prices and firmer foreign demand.
In a report posted on website of the People’s Bank of China (PBOC), the economists forecast annual inflation of just 1.4 percent this year, lowering their estimate from 2.2 percent earlier.
The report specified that the estimates represented the view of the economists and not that of the PBOC. The economists were cautiously optimistic, despite downward revisions to other forecasts that reflected the headwinds faced by the stuttering economy.
China’s sagging property market is “starting to stabilise” and the world economy should show further signs of recovery in coming months, said the economists who were led by Ma Jun, the cental bank’s chief economist.
Looser monetary policy conditions as a result of China cutting interest rates three times since November were also expected to help shore up growth in coming months, the economists said.
“We have reasons to expect some modest recovery in sequential growth in the second-half of this year,” they said.
The economists noted that it takes six to nine months for China’s economy to feel the benefits of monetary policy easing.
The report showed the economists had shaved their forecast for China’s economic growth to 7.0 percent for 2015, from 7.1 percent previously.