By Kevin Yao
BEIJING (Reuters) – China’s economic system is anticipated to have slowed within the first quarter as a protracted property downturn and weak private-sector confidence weigh on demand, sustaining pressures on policymakers to unveil extra stimulus measures.
Knowledge on Tuesday is forecast to indicate gross home product (GDP) grew 4.6% in January-March from a yr earlier, slowing from 5.2% within the earlier three months and hitting the weakest for the reason that first quarter of 2023, in response to a Reuters ballot.
The world’s second-largest economic system has struggled to mount a robust and sustainable a post-COVID bounce, burdened by a protracted property downturn, mounting native authorities money owed and weak private-sector spending.
The federal government has set a goal of round 5% for this yr, which has been described by most analysts as formidable, partly as a result of final yr’s development fee of 5.2% was probably flattered by a comparability with a COVID-hit 2022.
The economic system was off to a stable begin this yr, fanning optimism amongst some analysts for an improved 2024 consequence, however March knowledge on exports, client inflation and financial institution lending confirmed that momentum might falter once more and policymakers might have to launch extra stimulus to spur demand.
“I feel Q1 GDP development could possibly be barely stronger than anticipated – it could be shut to five%,” stated Zong Liang, chief of analysis at state-owned Financial institution of China.
“The expansion goal is achievable as we nonetheless have extra coverage area.”
On a quarterly foundation, the economic system is forecast to develop 1.4% within the first quarter, quickening from 1.0% in October-December, the ballot confirmed.
GDP knowledge is due on Tuesday at 0200 GMT. Separate knowledge on March exercise is anticipated to indicate each industrial output and retail gross sales slowing.
For 2024, the economic system is anticipated to develop at a subdued 4.6% tempo year-on-year, the ballot confirmed, falling in need of the official goal of round 5.0%.
Final week, Fitch lower its outlook on China’s sovereign credit standing to unfavourable, citing dangers to public funds as Beijing channels extra spending in direction of infrastructure and high-tech manufacturing, amid a shift away from the property sector.
The federal government is drawing on infrastructure work – a well-used playbook- to assist raise the economic system as shoppers are cautious of spending and companies lack confidence to develop.
China has set the 2024 quota for native authorities particular bond issuance at 3.9 trillion yuan ($538.79 billion), up from 3.8 trillion yuan final yr. Beijing additionally plans to difficulty 1 trillion yuan in particular ultra-long time period treasury bonds to assist some key sectors.
The Folks’s Financial institution of China (PBOC) has pledged to step up coverage assist for the economic system this yr and promote a rebound in costs.
Analysts polled by Reuters anticipated the central financial institution to chop the banks’ reserve requirement ratios (RRR) by 25 foundation factors (bps) within the third quarter, following a 50-basis level lower earlier this yr, which was the largest in two years.
The PBOC may embody the shopping for and promoting of treasury bonds in its coverage device reserve in future, Monetary Information – a publication backed by the central financial institution – quoted specialists as saying final week.
($1 = 7.2385 renminbi)