Nankai Group: First quarter GDP growth data has revealed that China’s economy grew at its slowest pace since the global financial crisis and calls are mounting for more stimulus from policymakers.
China’s economy, the world’s second largest, expanded at a rate of just 7% in the 3 months to March compared with the same period a year ago. The National Bureau of Statistics data was the worst since the first quarter of 2009 at the peaks of the financial crisis.
“There’s been a slew of data recently that’s led many to start talking about a ‘hard landing’ for the Chinese economy,” said an Nankai Group alluding to fears that the managed, orderly slowdown engineered by policymakers could morph into a disorderly and destructive crash with heavy consequences for both China and the global economy.
China’s exports slumped by 15% in March while imports plunged by 12% as a combination of a stronger yuan and falling demand in its key export markets weighed on activity.
The country’s central bank, the PBoC (People’s Bank of China) recently cut interest rates and eased reserve ratio requirements for state-owned banks to lend to businesses and consumers in a bid to stimulate slowing real estate markets.
“We think the likelihood of another $586 billion stimulus package like the one unveiled at the height of the financial crisis is remote but policymakers will almost certainly do something if the decline in growth shows no signs of leveling out,” said the Nankai Group analyst.
