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China’s GDP recovery likely lost steam in Q2 as consumption sags: poll
PHOTO: AFP/FILE
REUTERS, Beijing
China’s economy likely grew 5.1 percent in the second quarter from a year earlier, slowing from a strong start in the first three months due to sluggish consumer demand, keeping alive expectations Beijing will need to unleash more stimulus.
While that kind of growth would keep China’s full-year target of around 5 percent in reach, policymakers still need to deal with a protracted property crisis, weak domestic demand, a sliding yuan and trade disputes with the West.
Gross domestic product (GDP) in the world’s second-biggest economy is expected to expand 5 percent in 2024 year-on-year, according to the median forecast of 82 economists polled by Reuters. Analysts then tip slower growth of 4.5 percent for 2025.
A further slowdown in the second half of 2024 could prompt policymakers to ramp up economic support, which is now mostly reliant on overseas demand, analysts said.
Investors are watching next week’s key party leaders gathering for hints on the policies to address these challenges that go beyond industrial upgrades.
Policy advisers also believe China could unveil tax and fiscal reforms to allow debt-laden local governments to get more tax revenues to help ease pressures on local finances.
The projected second-quarter growth would be slower than the first quarter’s 5.3 percent growth and the weakest since the third quarter of 2023.
The Reuters poll expects GDP growth would slow further to 4.8 percent and 4.7 percent in the third and fourth quarters, respectively.
“Despite the continued housing crisis, China’s economy breathed a sigh of relief in the first half thanks to its robust exports, which in turn were driven by some rebalancing forces and property-related policy measures,” said Ting Lu, Nomura chief China economist, in a note on Wednesday.
However, he expected headline GDP growth may slow markedly to 4.2 percent year-on-year in the second half from around 5 percent in the first half, “unless Beijing ramps up stimulus by speeding up fund injections significantly for completing unfinished pre-sold homes.”
Authorities in May allowed local state-owned enterprises to buy unsold completed homes, with the central bank setting up a 300 billion yuan ($41.23 billion) relending loan facility for affordable housing. Analysts say markets now need to be more patient for additional property-supporting measures.
China’s June consumer inflation missed expectations, official data showed on Wednesday, indicating deflationary risks persist.
Analysts polled by Reuters estimate a 0.6 percent rise in China’s consumer But
The photo shows residential buildings under construction by Chinese real estate developer Vanke in Hangzhou, in eastern China’s Zhejiang province. Despite the continued housing crisis, China’s economy breathed a sigh of relief in the first half thanks to its robust exports.