China GDP expected to slow to 7.3% in third quarter
(Reuters) – China’s economy likely grew at its weakest pace in more than five years in the third quarter as a property downturn weighed on demand, a Reuters poll showed, raising the chances of more aggressive policy steps that may include cutting interest rates.
The economy may have expanded 7.3 percent in the third quarter from a year earlier – the weakest reading since the first quarter of 2009, when growth hit 6.6 percent during the height of the global crisis, according to a poll of 20 economists.
None of the economists believed Q3 growth will dip below 7 percent, although four penciled in 7.1 percent and one expected 7 percent.
The economy expanded by 7.5 percent in the second quarter and 7.4 percent in the first.
The government is due to release September data on trade, bank lending, investment and factory output in the coming weeks, leading up to third-quarter GDP on Oct. 21
“GDP growth is expected to slow to around 7.3 percent in the third quarter as property investment growth slides and manufacturing deflation worsens,” Tang Jianwei, an economist at Bank of Communications, said in a note.
Softer domestic demand, linked largely to the cooling property market, probably pulled down growth in China’s imports, investment and retail sales to multi-month or multi-year lows in September, a related poll showed.
Premier Li said on Wednesday that China will launch major investment projects in information networks, water conservancy and environmental protection this year, and pledged to policy adjustments made when needed.
But Li also made clear the government will tolerate growth slightly lower than the targeted 7.5 percent this year and rely more on reforms to generate new growth drivers.
MORE POLICY STEPS EXPECTED
The prospects of weaker growth may raise the chances of more aggressive policy steps such as cutting interest rates or reserve requirements across the board, but the government may not rush into action as the job market still appears to be holding up, analysts say.
