AFP, Beijing :
China recorded its lowest growth in a quarter of a century in 2015, an AFP survey has forecast, projecting a further slowdown in the world’s second-largest economy this year. Official gross domestic product (GDP) statistics for 2015 will be announced on Tuesday, and the median prediction in the poll of 18 economists put expansion at 6.9 percent — down from 7.3 percent the year before. The Asian giant is a key driver of the world economy, affecting businesses and employment across the planet, and worries about its health have roiled global markets in recent weeks and months.
The figure would be the weakest growth in the People’s Republic since the 3.8 percent of 1990, a year after the bloody Tiananmen Square crackdown rocked the country and isolated it internationally.
Growth will slow further this year, the survey forecast, with the median projection for 2016 coming in at 6.7 percent.
One bank, Nomura, forecast a precipitous drop to 5.8 percent. “The real economy will continue the downturn because of destocking, the reduction of overcapacity and deleveraging,” its economist Zhao Yang told AFP, citing in particular declining investment in property, a key sector. “I don’t think economic growth will bottom out in 2016,” he added. “It will be under rather big downward pressure for the next two to three years.” Chinese authorities struggled to keep control of a bucking stock market last year, weakening investor confidence in policymakers’ ability to implement reform and manage the transition to a more market-driven economy. An oversupply of empty housing in second-tier cities and stubborn overcapacity in industries dominated by legacy state-owned enterprises continue to weigh on growth. The expansion slowdown has stalled Beijing’s efforts to move the country’s economic model away from reliance on exports and infrastructure investment towards consumer spending.
Even so some analysts believe that markets have overreacted to negative factors and underestimated the fundamental resilience of China, whose official growth rates still far exceed those of the developed world. In the AFP survey, economists forecast 2015 fourth quarter growth of 6.8 percent, down from 6.9 percent in the previous three months — when US growth stood at 2.0 percent. “In spite of the strong global market response to the rout on China’s equity market, we do not expect the equity slump to have a major impact on China’s real economy,” Louis Kuijs, an economist with Oxford Economics in Hong Kong, told AFP in an email. “Indeed, we think that global markets have overreacted.” The company expects growth to slow to 6.3 percent this year, again pointing to the property sector, but added: “Those pressures remain cushioned by robust consumption.”
China recorded its lowest growth in a quarter of a century in 2015, an AFP survey has forecast, projecting a further slowdown in the world’s second-largest economy this year. Official gross domestic product (GDP) statistics for 2015 will be announced on Tuesday, and the median prediction in the poll of 18 economists put expansion at 6.9 percent — down from 7.3 percent the year before. The Asian giant is a key driver of the world economy, affecting businesses and employment across the planet, and worries about its health have roiled global markets in recent weeks and months.
The figure would be the weakest growth in the People’s Republic since the 3.8 percent of 1990, a year after the bloody Tiananmen Square crackdown rocked the country and isolated it internationally.
Growth will slow further this year, the survey forecast, with the median projection for 2016 coming in at 6.7 percent.
One bank, Nomura, forecast a precipitous drop to 5.8 percent. “The real economy will continue the downturn because of destocking, the reduction of overcapacity and deleveraging,” its economist Zhao Yang told AFP, citing in particular declining investment in property, a key sector. “I don’t think economic growth will bottom out in 2016,” he added. “It will be under rather big downward pressure for the next two to three years.” Chinese authorities struggled to keep control of a bucking stock market last year, weakening investor confidence in policymakers’ ability to implement reform and manage the transition to a more market-driven economy. An oversupply of empty housing in second-tier cities and stubborn overcapacity in industries dominated by legacy state-owned enterprises continue to weigh on growth. The expansion slowdown has stalled Beijing’s efforts to move the country’s economic model away from reliance on exports and infrastructure investment towards consumer spending.
Even so some analysts believe that markets have overreacted to negative factors and underestimated the fundamental resilience of China, whose official growth rates still far exceed those of the developed world. In the AFP survey, economists forecast 2015 fourth quarter growth of 6.8 percent, down from 6.9 percent in the previous three months — when US growth stood at 2.0 percent. “In spite of the strong global market response to the rout on China’s equity market, we do not expect the equity slump to have a major impact on China’s real economy,” Louis Kuijs, an economist with Oxford Economics in Hong Kong, told AFP in an email. “Indeed, we think that global markets have overreacted.” The company expects growth to slow to 6.3 percent this year, again pointing to the property sector, but added: “Those pressures remain cushioned by robust consumption.”
