China is off to a rough start in 2016.
The world’s second-largest economy grew at the slowest pace in seven years during the first quarter, according to a CNNMoney survey of economists.
Gross domestic product is forecast to have expanded by 6.6% in the three months ended March, compared with the same period a year earlier. That would be China’s weakest quarter since the dark days of the financial crisis in early 2009.
For the full year, economists expect GDP growth to slow further to 6.3% and fall short of the government’s own target of 6.5% to 7%. That compares with annual expansion of 6.9% in 2015.
Official GDP data for the first quarter will be published by China’s National Bureau of Statistics on Friday.
After years of explosive growth, China’s economy is now cooling fast, partly because of government efforts to shift China’s growth engine away from manufacturing and toward the services sector.
The country is also burdened with high levels of debt after years of aggressive lending.
“The success of China’s economic rebalancing in coming years will depend on policymakers’ ability to maintain adequate levels of financial system liquidity while reducing bank debt and boosting the country’s bond market,” said Peter Donisanu of Wells Fargo.
Much of the economic data issued this year — from trade to manufacturing activity — have painted a ho-hum picture of growth. Some of the weakness can be attributed to Lunar New Year, which fell in early February, and is a time when businesses and factories close.
But the pain is being felt widely. China announced in late February that it was planning to shed 1.8 million coal and steel jobs in an effort to reduce excess capacity. The cuts represent about 20% and 11% of China’s coal and steel jobs, respectively, according to IHS Insight.
Some experts say a bit of relief is around the corner. UBS economist Ning Zhang said that upcoming economic data is expected to show the beginnings of a rebound, thanks to an improving property sector and extra fiscal and credit support.
China is coming off a turbulent 2015 for markets and the yuan, which undermined investor confidence in Chinese authorities’ ability to smoothly manage the economic slowdown following decades of torrid growth.