China, US and European GDP Growth Forecasts

1. JP Morgan lowered China full year GDP growth forecast to 7.7% from the previous 8.0%, the second downgrade in a month, given grim external conditions and increasing risks in Europe. JPMorgan still expects China’s GDP growth this year as likely to contribute 40% of world economic growth. China is playing a significant role in stabilizing the global economic system and helping solve the problems of the indebted Eurozone.

China economic growth is expected to accelerate in the third quarter as the effect of policy easing becomes evident from July, allowing the country to remain a powerful engine for the global economic recovery.

Some data have shown that the economic slowdown in China is being reversed. Car sales last month jumped 23% from a year earlier, the fastest pace this year, showing that the sector is rebounding to support industrial production overall.

Policymakers appear willing to accept a structural downshift in growth and will likely direct further stimulus measures toward strategic industries and basic infrastructure in underdeveloped areas

2. US GDP growth forecast from the federal reserve. Notice that the forecasts from two years ago were wrong. They were too high. Also, the first quarter GDP growth has been revised down to 1.9%

Fed reserve blue chip survey of GDP growth forecasts.

3. Businessweek – The euro region’s debt crisis has increased risks for emerging markets from Thailand to Turkey that also face domestic constraints, according to the World Bank, which cut its outlook for 2013 global growth to 3 percent.

The Washington-based lender predicts the world’s economy will expand 2.5 percent this year, the same as a January forecast, after gains earlier this year were sapped by renewed market volatility over Greece and Spain.

The euro area is projected to contract 0.3 percent this year, unchanged from the World Bank’s January forecast. The euro area next year may grow 0.7 percent from a previous estimate of 1.1 percent.

Developing economies are also facing domestic difficulties. After leading the world out of recession over the past two years, about 60 percent of them are operating close or above their economic potential, Timmer said.

That “suggests that they will not be able to provide as much an impetus to global growth as before,” the bank said.

The U.S. is seen growing 2.1 percent this year, from 2.2 percent in January, and 2.4 percent next year.

China may grow 8.2 percent this year and 8.6 percent next year, compared with January estimates of 8.4 percent and 8.3 percent.

India’s expected expansion of 6.6 percent this year is more than the 6.5 percent expected five months ago, though the bank now sees growth of 6.9 percent next year compared with 7.7 percent in January.

The Bank also updated a study on the impact on the rest of the world of a more severe European crisis. It estimates that world growth would be 4.5 percent lower than currently expected next year if two large countries, accounting for 30 percent of the euro region’s economy, faced a credit freeze.

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