China looks set to report its worst quarterly growth since the financial crisis, according to a CNNMoney survey of economists.
Gross domestic product is forecast to have expanded by 7.0% in the first quarter of 2015, compared to the same period last year, according to the survey’s median estimate.
That’s quite a drop from the final quarter of 2014, when economic growth came in at 7.3%. Looking ahead, economists expect to see 6.8% annual GDP growth for this year, and even slower expansion at 6.5% in 2016.
The strength of China’s economy is often difficult to judge at the beginning of the year because of the Lunar New Year holiday. But many recent data points have been so disappointing that experts are bracing for the worst.
Although survey estimates remain in line with the government’s target of 7%, economists expect Beijing to take stimulus action if the economy slows much further, according to the survey. One of the biggest risks facing the Chinese economy continues to be a waning property sector.
“While we do not expect a dramatic slowdown, we think downward pressures on growth stemming from the weakness in real estate will remain in the coming months,” wrote Louis Kuijs of RBS in a research note. “Against this backdrop, we think more macroeconomic easing steps will follow in the coming months to ensure that GDP growth will not fall too much below the target of 7% in 2015.”
So far this year, the government has already tried to shore up the real estate sector, putting in place measures to boost property sales and battle slowing construction. But UBS economists Harrison Hsu and Wang Tao said the measures won’t be enough to reverse the overall slowdown.
Other risks continue to loom, including capital outflow and massive local government debt.
Overall, analysts expect Beijing to consider interest rate cuts, a lower reserve requirement ratio, and further monetary easing to support the economy.
GDP growth in China remains the most comprehensive gauge of the country’s economic health — an important number to watch as the government tries to steer the country towards consumption-driven growth.
China averaged economic expansion of around 10% a year over the past three decades, making it the world’s second-largest economy and boosting household wealth. But now, the pace of growth is languishing — China recorded GDP growth of 7.4% last year, the worst in 24 years, a significant slowdown from double-digit growth in 2010.
The National Bureau of Statistics will announce first quarter GDP numbers on April 15.
