China growth slowed to 6.9% in first quarter, worst since Q1 2009: Poll of economists

BEIJING (AFP) - China's GDP growth weakened to a new post-financial-crisis low in the first quarter, an AFP survey shows, as weakness in manufacturing, consumer spending and property prices weighed on the world's second-largest economy.

The median forecast in a poll of 15 economists indicates gross domestic product expanded 6.9 per cent in January-March, down from 7.3 per cent in the final three months of last year.

The National Bureau of Statistics (NBS) will release the official GDP figures for the period on Wednesday.

Such a result would represent the worst for a single quarter since the first three months of 2009, when GDP increased 6.6 per cent as the global financial crisis wreaked economic havoc.

China last year recorded its slowest annual growth since 1990, expanding 7.4 percent, down from 7.7 percent in 2013.

"The environment for economic growth since the start of the year has not been too ideal," Zhou Hao, Shanghai-based economist for ANZ, told AFP, citing continuing paring down of inventories by manufacturers and further weakness in property.

Indicators so far this year have been weak and signs of slowing growth have mounted. During the first two months, industrial production and retail sales data struck multi-year lows, NBS data showed, while new home prices renewed their falls in February and March after a rare uptick in January.

Chinese exports and imports both fell in March, authorities said Monday, suggesting difficulties on the commercial front for the world's biggest trader in goods.

Nevertheless, China's Communist Party leadership appears largely comfortable with weaker growth, a development top officials say heralds a "new normal" of more stable, consumer-driven expansion in line with China's increasingly mature economy.

But authorities want to avoid too fast a deceleration that could hurt job growth - a key component of social stability in the world's most populous nation.

Officials have taken more aggressive steps to loosen monetary policy, with the central People's Bank of China (PBoC) cutting benchmark interest rates earlier this year for the second time in three months, loosening bank reserve requirement ratios (RRR) to spur lending and taking steps to boost the slumping property market.

Economists broadly expect more such moves as authorities seek to keep growth within striking distance of their target of "about 7.0 per cent" expansion for 2015.

Brian Jackson, Beijing-based senior economist with IHS Economics, said his firm's estimate of 6.8 per cent Q1 growth was largely pinned on property woes.

"The real estate market has been weakening since early 2013 and contracting in 2014," he told AFP.

"The fact that it has continued to contract despite a number of easing policies in the second half of 2014 is particularly concerning."

For this year, the AFP survey shows growth slowing further to a median 6.8 per cent, lower than a forecast of 7.0 per cent in a similar poll in January.

The government last month reduced its annual GDP growth target from the approximately 7.5 per cent aimed for in 2014, a clear recognition that slower expansions are on the horizon.

Capital Economics played down emerging concerns that policy easing had so far failed to stem "downward pressure" and that the government's annual growth objective will not be achieved.

"We're more optimistic the target will be met as we think there is a lot more that policymakers can, and likely will, do to shore up activity in order to prevent growth from slipping further," economists Julian Evans-Pritchard and Chang Liu said in a report.

They cited further interest rate and RRR cuts as well as additional easing of lending restrictions.

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