BEIJING: China’s financial system probably grew on the slowest tempo in one-and-a-half years within the fourth quarter, dragged by weaker demand because of a property downturn, curbs on debt and strict COVID-19 measures, raising heat on policymakers to roll out extra easing steps.
Data on Monday (Jan 17) is anticipated to point out gross home product grew 3.6 per cent in October to December from a yr earlier – the weakest tempo because the second quarter of 2020 and slowing from 4.9 per cent within the third quarter, a Reuters ballot confirmed.
On a quarterly foundation, growth is forecast to rise to 1.1 per cent within the fourth quarter from 0.2 per cent in July to September.
For 2021, GDP probably expanded 8 per cent, which might be the best annual growth in a decade, partly because of the low base set in 2020, when the financial system was jolted by COVID-19 and stringent lockdowns.
The authorities is because of launch the GDP knowledge, together with December exercise knowledge, on Monday at 10am.
The world’s second-largest financial system, which cooled over the course of final yr, faces a number of headwinds in 2022, together with persistent property weak point and a recent problem from the latest native unfold of the highly-contagious Omicron variant.
Exports, which had been one of many few areas of energy in 2021, are additionally anticipated to sluggish, whereas the federal government is seen persevering with its clampdown on industrial emissions.
Policymakers have vowed to move off a sharper slowdown, forward of a key Communist Party Congress late this yr.
The central financial institution is ready to unveil extra easing steps, although it can probably favour injecting additional cash into the financial system fairly than slicing rates of interest too aggressively, coverage insiders and economists mentioned.
Analysts polled by Reuters count on the central financial institution to ship extra modest easing steps, together with slicing banks’ reserve requirement ratios and the one-year mortgage prime charge – the benchmark lending charge.
Analysts at ANZ mentioned in a be aware that they noticed a risk that the central financial institution will reduce the speed on its medium-term lending facility on Monday.
Policymakers have additionally pledged to step up fiscal assist for the financial system, rushing up native authorities particular bond issuance to spur infrastructure funding and planning extra tax cuts.
“We might see a larger effect of the monetary and fiscal easing only in the second half of 2022 due to the transmission lags of these policies,” analysts at Natixis mentioned in a be aware.
“The recent monetary easing and the stabilization of PMI (factory activity) have indicated such a direction, but more efforts are needed to boost fixed asset investment.”
Growth is more likely to sluggish to five.2 per cent in 2022, in accordance with the ballot.