HSBC has amended this year’s gross domestic product (GDP) growth forecast from 5.2 percent to 5.8 percent.
This was mainly due to the recent high frequency observed in industrial productions and retail sales.
According to HSBC, the expansion is expected to hold up in the coming quarters but at a more sustainable pace. However, exports imply that the slowdown may not be as severe as originally thought.
Similar to the previous year, the economic slowdown was driven by the smaller contributions from net exports and a drawdown in inventories, as the restocking cycle worldwide is about to end.
These factors will likely reverse in 2012, in line with expected economic recovery. This will also raise private domestic demand and lift GDP growth to an upwardly revised 6.2 percent next year.
However, inflation has been ascending, initially due to higher housing and personal transport costs. Inflation has become more broad-based, as capacity remains tight and has lifted demand-led price pressures. This will happen even when growth eases to a more sustainable rate, with higher energy costs adding to inflation, thus revising the inflation forecast upwards.