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Economic growth forecast to slow to 7% in Q1
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CHINA'S economic growth is expected to slow to 7 percent in the first quarter due to rising deflation risks, weakening investment and a decline in the property market, the State Information Center, a top government think tank, said today.
"China still faces downward economic pressure this year with the growth rate possibly moderating further in the first three months," the center, an affiliate under the National Development and Reform Commission, said in a quarterly report.
The country's gross domestic product expanded 7.3 percent from a year earlier in the fourth quarter of last year when the country’s growth entered a phase officials refer to as the “new normal.”
"China is trying to accelerate economic reforms against the backdrop of an uncertain real estate sector, insufficient domestic demand and slower fixed-asset investment, which makes it hard to rebound," the center said.
It predicted fixed-asset investment in the first quarter to rise 14.3 percent year on year, weakening from the 15.7 percent pace in 2014 with the investment absorbed by the property sector gaining 7 percent.
Consumption may stay stable with retail sales adding 11.7 percent, compared with 12 percent in 2014.
Exports may manage to increase 5 percent during the January-March period but imports could drop 10 percent in terms of value due to weak demand and lower commodity prices on the global market.
The Consumer Price Index, the main gauge of inflation, is expected to increase 1.2 percent, a reflection of accumulating deflation risks.
China may be beset by issues ranging from excessive production capacity, local government debts and high financing costs this year, the center said, adding more attention should be paid to the real estate sector, which may have entered a long-term period of correction.
"Monetary policies should be flexible, and the country should reduce interest or reserve requirement ratio rates at appropriate times based on inflation conditions," the center said.
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