CICC lowers China 2016 growth forecast to 6.7%

BEIJING - China International Capital Corp (CICC) on Monday lowered the forecast for China's real GDP growth in 2016 from 6.9 percent to 6.7 percent.

The downward adjustment was "largely driven by the softer-than-expected global demand recovery," CICC said in a research note.

Consumption demand is expected to be largely stable, government investment may continue to register stronger growth than that of the private sector, and export demand may remain weak in the latter half of this year due to political uncertainties in Europe and the United States, the CICC said.

The company maintained its consumer inflation forecast at 1.9 percent for 2016, with the consumer price index trending down in the next few months before picking up moderately toward the end of the year.

"We maintain our forecast of no more interest rate cuts in 2016, and we reduce our reserve requirement ratio cut forecast from four more cuts to one more cut over the rest of the year," it said.

Meanwhile, the country's fiscal policy is expected to loosen further after the Ministry of Finance stepped up efforts in fiscal loosening and lowered the tax burden of the corporate sector, according to the note.

The ministry has moved to promote the more efficient use of fiscal deposits, step up local government bond swaps and bond issuance, and also lower the effective tax burden of companies via value-added tax reform and lower social security contributions.

The country's GDP grew 6.7 percent year on year in the first quarter of this year, down from 6.8 percent in the final quarter of 2015.