A warning from Guangdong, the mainland's export powerhouse, of a deepening economic downturn in the second half of this year signals broader concern for the nation's economic health.
Guangdong Governor Zhu Xiaodan on Wednesday conceded that the provincial economy grew a 'weaker than expected' 7.4 per cent in the first six months of the year. Exports grew only 6.9 per cent, a slowdown which is already spilling into the second half. Zhu told his subordinates to have 'a higher level of crisis awareness' as other key economic indicators, such as fixed asset investment, retail sales, and the government's fiscal revenue were worse than anticipated and were below national averages.
Some economists and Hong Kong trade bodies said Guangdong's exports had suffered from the euro- zone debt crisis and the province faced an uphill battle to meet its full-year growth target of 8.5 per cent.
Economists expect the mainland will today report 7.7 per cent growth in gross domestic product (GDP) for the second quarter, down from 8.1 per cent in the first quarter.
'Guangdong's growth normally is above the national level, and it was dragged down by weaker exports to Europe and inbound investments,' Mizuho Securities chief economist Shen Jianguang said.
He said the mainland's GDP growth may fall below 7.5 per cent for the second quarter. The central government's target growth rate is 7.5 per cent for the year.
Bank of America-Merrill Lynch economist Lu Ting said there was an increasing risk GDP growth between April and June could miss the 7.5 per cent target.