China's central bank today lowered full-year GDP growth forecast to 7 per cent from the previous estimate of 7.1 per cent issued in December as first-half economic momentum turned out to be weaker than expected in the world's second largest economy.
"But we have reason to expect some modest recovery in sequential growth in the second half," said the updated mid-year report by the People's Bank of China.
China's economy slowed down to 7.4 per cent last year.
IMF forecast said China's growth rate would further decline to 6.8 this year and 6.3 next year.
"Overall economic conditions are worsening because of a faster-than-expected slowdown of exports and real estate investment, with the lowest indicators since the global financial crisis in 2008," central bank's chief economist Ma Jun, who wrote the mid year report, was quoted as saying by state-run China Daily.
"Recently, the nonperforming loan ratio has been rising and commercial banks have become more cautious about lending, especially to producers of coal, steel, construction materials and companies involved in export-oriented manufacturing and real estate," Ma said.
The PBOC also slashed its forecast for consumer price inflation to 1.4 per cent from 2.2 per cent previously.
And it cut a number of other key forecast like exports to 2.5 per cent growth from 6.9 per cent previously, imports to a 4.2 per cent contraction from growth of 5.1 per cent.
It also said fixed-asset investment will rise of 12.6 per cent from 12.8 per cent previously and retail sales will have a growth of 10.7 per cent from 12.2 per cent.
The PBOC did, however, forecast that the positive effects of already-announced policies will become evident starting in the third quarter.
Recoveries in the US and European economies are likely to support China's export rebound. In addition, the rise of housing prices since April will accelerate property investment, according to the report.
