SHANGHAI (AFP) – China’s economic growth in the third quarter fell to its slowest since the depths of the global financial crisis more than five years ago, an AFP survey projects.
The country’s gross domestic product is predicted to have risen 7.2 per cent year-on-year in the July-September period, an AFP poll of 17 economists showed.
The median forecast for the world’s second-largest economy, a key driver of global growth, would be the worst since the first quarter of 2009, when growth stagnated at 6.6 per cent.
The government will release the official GDP figure on Tuesday.
The setback would be likely to prompt more stimulus intervention from Beijing, respondents said, which has set a 7.5 per cent target for expansion this year – the pace of growth in the second quarter.
China’s economy has been pummelled by a deflating property bubble as well as a government crackdown on corruption and weak demand from Europe.
“Given much weaker growth… Beijing will have to push ahead with more aggressive policies in order to hit the 7.5 per cent GDP growth target in 2014,” said a Beijing-based economist for Standard Chartered Bank, Shen Lan.
But the consensus is that China will miss that target, though Premier Li Keqiang has allowed himself an escape clause by qualifying the goal as “around” 7.5 per cent.
The analysts polled by AFP expect the economy to grow 7.3 per cent this year, unchanged from the previous forecast three months ago but slower than actual growth of 7.7 per cent in 2013.
Although China’s economy is still growing faster than most other countries, some policy makers believe seven per cent annual growth is needed to maintain job creation in the world’s most populous nation.
Economic data for September have been mixed. Better than expected exports and imports brought some cheer, while the weakest inflation in nearly five years showed the economic engine is sputtering.
China has so far clung to “targeted” measures to spur growth, shunning a repeat of its 4.0 trillion yuan (now $656 billion) stimulus package of 2008.
The chief economist for China’s central bank, Ma Jun, said earlier this month that the government wanted to avoid “excessive stimulus”.
In what has been called a “mini-stimulus”, the government has so far used targeted cuts in reserve requirements – the amount of funds banks must put aside – as well as a 500 billion yuan fund injection into the country’s five biggest banks for re-lending just last month.
Analysts are divided over whether the People’s Bank of China, the central bank, might resort to an across-the-board reserve requirement cut or even slashing interest rates.
“We may see some more policy easing before the year-end, but I expect that if we do it will be targeted and limited scope,” said China economist for Capital Economics, Julian Evans-Pritchard.
The government still has weapons in its arsenal, including greater infrastructure spending and tax cuts, while easier mortgage lending polices announced late last month could take the sting out of falling housing prices, analysts said.