Beijing, Jan. 16 (BNA): China’s economy likely grew at the slowest pace in 1-1/2 years in the fourth quarter, weighed down by weak demand due to slumping real estate, debt restrictions and strict COVID-19 measures, adding to pressure on makers Policies to take further facilitation steps.
A Reuters poll showed Monday’s data is expected to show GDP growth of 3.6% in the October-December period from a year earlier — the weakest pace since the second quarter of 2020 and a slowdown from 4.9% in the third quarter.
On a quarterly basis, growth is expected to pick up to 1.1% in the fourth quarter from 0.2% in July-September.
For 2021, GDP expanded at most likely 8.0%, the highest annual growth rate in a decade, due in part to the low base set in 2020, when the economy was hit by the coronavirus and a strict lockdown.
The government is due to publish GDP data along with December activity data on Monday at 02:00 GMT.
The world’s second-largest economy, which has cooled down over the past year, faces multiple headwinds in 2022, including persistent property weakness and a new challenge from the recent domestic spread of the highly contagious Omicron variant.
Exports, which were one of the few areas of strength in 2021, are also expected to slow, while the government continues to crack down on industrial emissions.
Policymakers vowed to avoid a sharper slowdown, ahead of a major Communist Party conference late this year.
The central bank is set to unveil more easing steps, though it is likely to prefer injecting more liquidity into the economy rather than cutting interest rates sharply, policy insiders and economists said.
Analysts polled by Reuters expect the central bank to offer more modest easing steps, including lowering banks’ reserve requirement ratios, and the one-year principal rate (LPR) – the benchmark lending rate.
Analysts at ANZ said in a note that they see a possibility that the central bank will cut the interest rate on its Medium Term Lending Facility (MLF) on Monday.
Policymakers also pledged to ramp up financial support for the economy, speed up local government bond issuance to stimulate infrastructure investment and plan for more tax cuts.
“We may see a greater impact of monetary and fiscal easing in the second half of 2022 only because of the delayed transition of these policies,” Natixis analysts said in a note, according to Reuters.
“The recent monetary easing and the stabilization of the PMI (factory activity) point to such a trend, but more efforts are needed to boost investment in fixed assets.”
According to the survey, growth is likely to slow to 5.2% in 2022.
HF