China’s GDP to grow by 8.8 percent in 2012

Beijing : China’s GDP will grow by about 8.8 percent in 2012, further moderating from 9.1 percent in the third quarter of 2011, the central bank said.

The bank also said that the consumer price index (CPI), a main gauge of inflation, would rise around 3.5 percent in 2012.

“Price rises will slow down markedly in 2012 as the economy downshifts, food prices retreat and imported inflation tapers off,” the Bank of China said in its 2012 first-quarter economic outlook report.

Zhuang Jian, a senior economist with Asian Development Bank, anticipated a downward trend in the overall price level in 2012, as a result of diminishing carryover effects and the government’s prudent monetary policy direction.

“There might be a certain degree of fluctuation in monthly figures, but the overall CPI growth will stay around 4 percent,” Xinhua Tuesday quoted Zhuang as saying.

The central bank had hiked banks’ reserve requirement ratio (RRR) six times and the benchmark interest rate three times in 2011 to fight inflation before cutting the RRR by 50 basis points in December.

Despite easing inflation, long-term pressures remain, forcing policy makers to keep an eye on price rises, analysts say.

Commodity prices may run high because of future quantitative easing measures as global central banks unleash liquidity to stimulate the sluggish economy.

China’s CPI eased to a 14-month low of 4.2 percent in November from the year’s peak of 6.5 percent in July.

It hit 5.5 percent year-on-year during the January-November period, well above the government’s full-year target of 4 percent.

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