OECD lowers China's GDP forecast to 7.8% for 2021
Published: Mar 10, 2021 02:28 AM
Industry PMI Photo:VCG


The Organization for Economic Co-operation and Development (OECD) lowered its forecast of China's economic growth to 7.8 percent in 2021, according to its latest interim economic outlook released on Tuesday.

The world's second largest economy was projected to record a GDP growth of 8 percent in 2021 and 4.9 percent in 2022, the OECD said in a report in December last year.

The OECD did not provide details on the adjustment, which was not shared by Chinese economists who firmly believed that the country's GDP can grow more than 8 percent this year as economic recovery continues to accelerate and more people are getting inoculated with the COVID-19 vaccines.

Cao Heping, a professor of economics at Peking University in Beijing, told the Global Times on Tuesday that "the minor adjustment makes no sense." 

The economic impact of the pandemic and its aftermath remains well contained in many Asia-Pacific economies, reflecting effective public health measures and the significant regional boost provided by the upturn in industrial activity and the rebound in China.

Taking into account that some signs of inflation have begun to emerge, the OECD report said that a faster-than-expected recovery in demand, especially from China, coupled with shortfalls in supply, has pushed up food and metals prices considerably, and oil prices have rebounded to the average level in 2019. Besides, fiscal policy may tighten in some emerging market economies this year, including China, the report said.

Cao noted that China has already tightened to some extent the liquidity in its currency policy, compared with the level of the end of last year, and the country has taken measures to stabilize its economy preventing inflation.

Tian Yun, vice director of the Beijing Economic Operation Association, and former economist at the state economic planning agency, told the Global Times on Tuesday that the OECD adjustment is hard to accept, and it is not plausible as more international organizations are forecasting a higher growth for China's GDP this year.

"When the economic data of the first quarter is released, I believe that international organizations, like the IMF, will raise their forecast because this quarter will show stellar increase that far beat expectations based on the recently announced official data, such as exports and consumption, during the January-February period," Tian said. 

The IMF projects China's economy will grow 8.1 percent in 2021 and 5.6 percent in 2022.

Tian estimated a 16 percent of GDP growth in the first quarter year over year and more than 8.5 percent for 2021.

The official data is scheduled to be released on March 15, according to the National Bureau of Statistics.

China's economic growth in the first two months has continued a steady recovery momentum since the second quarter of 2020, Ning Jizhe, vice chairman of the National Development and Reform Commission, China's economic planner, said at a press briefing in Beijing on Monday.

Retail and catering consumption grew 28.7 percent year over year during this year's Spring Festival holidays, up 4.9 percent from 2019. Power generation and the number of freight rail traffic increased by 24.2 percent and 16.5 percent respectively year over year.

China announced on Friday a growth target of over 6 percent for its economy for 2021, well below a widely accepted forecast of over 8 percent for the year.

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