China’s exports unexpectedly fell 6.4 percent in April from a year earlier, while imports tumbled by a deeper-than-forecast 16.2 percent, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown.
The dismal trade performance raises the risk that second-quarter economic growth may dip below 7 percent for the first time since the depths of the global financial crisis, adding to official fears of job losses and growing levels of bad debt.
“This is bad. I expect an interest rate cut this weekend,” said economist Tim Condon at ING in Singapore.
“This is going to make 7 percent (GDP) growth hard to attain. It looks like the weakness in the first quarter wasn’t transitory. It’s persistent.”
The central bank has lowered interest rates and banks’ reserve requirement ratio (RRR) thrice in three months since November to stoke the, and most analysts had expected it to loosen policy again on both fronts in coming months.
Policy insiders told Reuters this week that China’s leaders have been caught off guard by the sharpness of the downturn, and are likely to resort to fiscal stimulus to revive growth after a flurry of monetary policy easing has proved less effective than hoped.
Imports have been weaker than exports, falling 16.2 percent in April from a year earlier, according to data released by the General Administration of Customs on Friday, highlighting tepid domestic demand as the world’s second-largest economy slows.
Analysts polled by Reuters had expected exports would rise 2.4 percent in April after a 15 percent plunge in March, and predicted imports would fall 12 percent after a 12.7 percent drop the previous month.
In April, exports to the United States, China’s top export market, rose 3.1 percent from a year earlier, while shipments to the European Union, the second largest market, dipped 10.4 percent, according to customs data.