Chinese Growth Forecast Downgraded

Structural reforms may cause short-term volatility for Chinese equities and a downgrade for GDP growth, but will they be enough to ensure positive long term prospects for the country?

Coutts 11 November, 2014 | 2:48PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Alan Higgins, Chief Investment Officer at Coutts, gives his views on the outlook for the global economy.

Emerging markets continue to be undervalued, with too much focus on a slowing China. For all the hype, we are still sanguine about the outlook for China and Asia in general.  While momentum may be easing in the region’s economic powerhouse, we believe a shift in Beijing’s growth focus from quantity to quality is desirable, providing an upbeat outlook for China itself and wider emerging markets.

The International Monetary Fund now expects 2014 growth of 7.4%, down marginally from its June forecast of 7.5% and similar to Beijing’s projections. However, we see China’s growth falling below this, towards 6.7% in 2015 as slower growth is necessary for China to ‘normalise’.

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