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China economy

China growth slides to 25-year low in 2015: survey of economists

Poll of economists puts expansion at 6.9 per cent – down from 7.3 per cent for 2014

PUBLISHED : Sunday, 17 January, 2016, 7:04pm
UPDATED : Sunday, 17 January, 2016, 11:45pm

Economists believe China’s growth last year was the lowest in a quarter of a century, according to an Agence France-Presse survey which projected a further slowdown in the world’s second largest economy this year.

Official gross domestic product statistics for last year will be announced on Tuesday.

The median prediction in the poll of 18 economists put expansion at 6.9 per cent – down from 7.3 per cent for 2014.

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The figure would be the weakest growth in the country since the 3.8 per cent of 1990, a year after the Tiananmen crackdown.

Growth will slow further this year, the survey forecast, with the median projection coming in at 6.7 per cent.

One bank, Nomura, forecast a precipitous drop to 5.8 per cent.

“The real economy will continue the downturn because of destocking, the reduction of overcapacity and deleveraging,” its economist Zhao Yang said, citing in particular declining investment in property. “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.”

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Mainland 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.

In the survey, economists forecast 2015 fourth quarter growth of 6.8 per cent, down from 6.9 per cent in the previous three months.

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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,” said Louis Kuijs, an economist with Oxford Economics in Hong Kong. “Indeed, we think that global markets have overreacted.”

The company expects growth to slow to 6.3 per cent this year, pointing to the property sector as a problem.