China second-quarter GDP seen steady at 7.4 percent, recovery in sight

Mon Jul 7, 2014 3:30am EDT
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By Xiaoyi Shao and Koh Gui Qing

BEIJING (Reuters) - China's economy probably steadied in the second quarter with annual growth holding firm at 7.4 percent, a Reuters poll showed, suggesting that a recovery is taking hold as a flurry of government stimulus measures kick in.

All but three of the 21 analysts polled by Reuters predicted that growth either stabilised or edged up between April and June, reinforcing the view that authorities have successfully arrested a cooldown with a modest loosening in policies.

Indeed, even though economists expect the headline growth rate to cling to an 18-month low of 7.4 percent, they also believe that China's export and manufacturing sectors likely enjoyed their best performances in several months in June.

"We expect China's upcoming June and second-quarter data to show an economy that is still recovering," UBS analysts said in a note to clients.

"With more easing measures underway and an ongoing export recovery, sequential growth momentum should warm up further in the third quarter."

China's economic growth quickened in the second quarter from the previous three months, but further modest government support measures will still be needed, Premier Li Keqiang said on Monday, without giving a GDP figure.

When June data is released in coming days, investors may get clues on just how much more may be needed on the stimulus front to maintain the recently regained momentum.

Exports are forecast to rise 10.6 percent in June from a year ago, faster than May's 7 percent expansion and the best showing in five months. Imports likely snapped back into positive territory, growing 5.8 percent, after May's 1.6 percent drop.   Continued...

A worker examines a pumpjack at a PetroChina oil field in Panjin, Liaoning province June 30, 2014.  REUTERS/Sheng Li