Estimates for success

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As the Association of Southeast Asian Nations marks its 50th birthday this year, holding the last day of The World Economic Forum on ASEAN today, ratings agency Fitch sets forward its predictions for the neighbouring superpower’s growth this year and next, estimating that growth in the gross domestic product for China at 6.5 per cent for this year, dipping below the 6 per cent mark to 5.9 per cent for next year.
This will be coupled with inflation rising from a current expected 2.2 per cent for this year to 2.5 per cent for next year. In addition, the group estimates that the dollar will further strengthen against the yuan both this and next year, rising from US$6.95 last year to US$7.2 this year and further to US$7.4 by next year.
The local currency is also loosely pegged to the United States Dollar.
‘China’s GDP grew by 6.9 per cent in 1Q17 compared to an estimate of 6.6 per cent in the March […] and industrial production and fixed asset investment accelerated in March,’ notes the report, pointing out in particular that ‘the impact of earlier policy stimulus on activity has proved more powerful than anticipated, and the slowdown in the housing market has taken longer to materialise than expected’.
For the second half of the current year the group believes ‘GDP growth will decline’, noting that ‘the recent tightening of onshore liquidity conditions is likely to see credit growth slow,’ while the housing market will ‘moderate’. This has historically caused a downturn in the local gaming market.
Regionally, the gaming and finance hub of Singapore takes the number one spot of highest GDP per capita of ASEAN, according to International Monetary Fund estimates, while, according to the local Statistics and Census Service (DSEC), current GDP per capita posted US$69,372 (MOP554,619) as of year-end.
The recent announcement of the MSAR’s participation in the Belt and Road Forum for International Co-operation, kicking off this Sunday, provides the city with a chance to participate in the dialogue of the mega-city building, as part of the overall One Belt, One Road initiative, taking advantage of the Greater Bay Area, proposed to comprise eleven total cities including both SARs.
If suggestions such as that made by Chairman of the National People’s Congress Zhang Dejiang during his visit – that the city should look to ease access restrictions on movement between the Mainland and the MSAR – the city could stand to benefit from an influx of individuals and capital, although with less purchasing power and facing down increased inflation.