China became second world's economy
Almaty. February 14. Kazakhstan Today - China has become second world's biggest economy, Kazakhstan Today reports.
China's growth has been powering ahead while the wheels have come off Japan's economy, BBC News reported.
China has overtaken Japan as the world's second-biggest economy.
Japan's economy was worth $5.474 trillion (3.414 trillion pound) at the end of 2010, figures from Tokyo have shown. China's economy was closer to $5.8 trillion in the same period.
Japan has been hit by a drop in exports and consumer demand, while China has enjoyed a manufacturing boom.
At its current rate of growth, analysts see China replacing the US as the world's top economy in about a decade.
"It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy.
Japan played down the significance of the shift in the economic league table, and the fact that it has been replaced as the second-largest economy for the first time in more than four decades.
"As an economy, we are not competing for rankings but working to improve citizens' lives," said Economics Minister Kaoru Yosano.
The minister added that China's booming economy was welcome news for Japan as a neighbouring country.
China is now Japan's main trading partner and is increasingly important to companies such as electronics firm Sony and carmakers like Honda and Toyota.
Most economists agree that while China as a whole is growing, and the average person is getting wealthier, comparing only the size of its economy to Japan's does not paint an accurate enough picture.
"GDP per head in China is about $4,500, but in Japan it's about $40,000 per head," said Mr Miller of GK Dragonomics.
"Most people in China are still poor, more people live in the countryside than in cities. The average Japanese person is much richer than the average Chinese person."
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Annual inflation in February and March continued to decrease, albeit at a slower pace. Inflation expectations have slightly decreased but remain at a relatively high level. The external inflation background continues to be neutral with the ongoing trend of declining grain prices in global markets. Within the domestic economy, inflationary pressure persists due to robust internal demand and unanchored inflation expectations," reads the bank’s official statement.
In the current circumstances, there is still limited room for easing monetary policy. This space will begin to form with the stable reduction of the stable part of inflation," it said.
Monthly inflation slowed down in March to 0.7% after a spike in the previous month (1.1%), forming above the average historical values (0.6%). A similar dynamic is observed for the indicators of core and seasonally adjusted inflation - a significant reduction in March after a sharp acceleration in February," said the bank.
The external inflation background is neutral. The cost of food in global markets in March shows a slight increase, mainly due to rising prices for vegetable oils. Grain prices continue to decline against the background of the realization of the harvested crop in exporting countries and the uninterrupted operation of maritime trade routes," said the bank.
In the European Union, the trend towards slowing inflation continues against the backdrop of the European Central Bank's restrictive policy. Despite expectations of weaker economic growth indicators this year, the ECB remains committed to returning inflation to its target value and intends to maintain restrictive monetary and credit conditions for this purpose," said National Bank Governor Timur Suleimenov in an April 12 statement.
The Federal Reserve notes that inflation in the United States still remains high. In March, the annual inflation rate increased to 3.5%, accelerating for the second consecutive month. According to the Fed's rhetoric, the current monetary and credit conditions will continue going forward. In Russia - a key trading partner of Kazakhstan, inflation in March remained at 7.7%. According to the statement from the Russian regulator, achieving the inflation target involves a prolonged period of maintaining tight monetary and credit conditions," said Suleimenov.
Pro-inflationary risks are conditioned by the continuation of reforms in the area of regulated prices, the consequences of abnormal floods in Kazakhstan, and the uncertainty associated with the volumes of budget expenditures needed for their elimination," the bank said.
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