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China July-September economic growth may dip to 5-year low

China July-September economic growth may dip to 5-year low
Investors in the country are biting their nails as they anticipate the release of economic data on Monday, which may show the world’s second-largest economy grows at its weakest pace in more than five years, state-run Xinhua news agency reported on Saturday.

Wang Tao, chief China economist with UBS, expected China’s third-quarter GDP growth to slide to 7.1 per cent, from 7.5 per cent in the second quarter and 7.4 per cent in the first quarter. It may be the lowest pace of increase since the first quarter of 2009, when the global financial crisis brought growth down to 6.6 per cent, the report said.

China is scheduled to release its major September economic indicators this week, along with its third-quarter GDP growth. A Chinese official think tank has projected this year’s GDP may be around 7.3 per cent which is lower than the official target of 7.5 per cent.

The World Bank projected it to be 7.4 per cent. China’s GDP grew at 7.7 per cent last year. Forecasts improving export and import growth for September, which is likely to register a trade surplus of $37 billion, Wang said in a report.

Analysts expected the country’s inflation to remain contained, with consumer price index seen coming in under 2 per cent for September, in line with weak demand and continued industrial oversupply. Lian Ping, chief economist with the Bank of Communications, said he expects third-quarter GDP growth at 7.3 per cent, with a sharp decline in property investment pulling down the country’s total investment and weighing on the economy.

To stabilise growth, Wang said the government will step up easing measures in the last quarter. They may include lowering down payment ratios for first home-buyers and accelerating reforms to boost growth momentum.

HSBC also believes China’s policymakers will step up fiscal spending and targeted quantitative easing in the coming period to stabilise growth. HSBC lowered its forecast for third-quarter to 7.3 per cent from 7.4 per cent, saying the effect of some earlier ‘mini-stimulus’ measures are starting to wear off and the spill-over from the property slowdown continues to be felt in related sectors.

K J M Varma

K J M Varma

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