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February 3, 2016

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Home » Business » Economy

‘Bumpy start’ for China’s economy

By Wang Yanlin | February 3, 2016, Wednesday | Print Edition

CHINA’S economy may have a “bumpy start this year” as data for January are likely to be weak due to the holiday effect and the extremely cold weather, analysts said ahead of the release of the data set in the middle of this month.

They expect a slightly higher inflation, continued but narrower drop in prices in factories, weak exports, less contraction of imports, strong credit growth and a further drop in foreign exchange reserves.

“China’s economy is likely to have a bumpy start this year due to seasonal factors as well as the continued weak demand in both home and abroad,” said Liu Xuezhi, an economist at the Bank of Communications.

China’s gross domestic product grew 6.8 percent in the fourth quarter of last year, and ended 2015 with a rate of 6.9 percent, the slowest annual expansion in a quarter of a century.

Liu said that the rise in inflation “may accelerate after the bad weather disrupted supply, together with its regular increases ahead of the Spring Festival.”

The Consumer Price Index, the main gauge of inflation, is set to rise 2 percent from a year earlier in January, up from 1.6 percent in December, according to Liu’s estimates.

Over the past two months snow and storm have battered many parts of the country that led to higher prices for fresh vegetables, meat and fruits. The Spring Festival holiday, which starts on Sunday, is also expected to weigh on prices of various products and services.

Liu said the Producer Price Index, the factory-gate measurement of inflation, may drop 5.2 percent in January, narrowing from December’s slump of 5.9 percent.

Because of the weak demand in the US and Europe, Wang said exports were expected to be sluggish while imports may improve from a low comparative base.

Credit may grow strongly in January as the government continued to ease monetary policies, economists said. They added that foreign exchange reserves likely have dropped further in January.

Economy


 

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