China first-quarter GDP growth seen dipping to 6-year low, more policy stimulus on cards

Tue Apr 14, 2015 6:45pm EDT
 
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By Kevin Yao

BEIJING (Reuters) - China's annual economic growth likely slowed to a six-year low of 7 percent in the first quarter as demand at home and abroad faltered, fanning expectations that authorities will have to roll out more policy stimulus to avert a sharper slowdown.

Chinese reform-minded leaders, while emphasizing the need to adapt to "a new normal" of slower but better-quality growth, have signaled growing concern about a deeper downturn that could fuel job losses and debt defaults.

Premier Li Keqiang said last week the world's second-largest economy faces increased downward pressures and the government must "stand up to" such pressure to avoid an impact on employment and incomes.

Data on Wednesday is expected to show the economy grew 7 percent in the January-March quarter from a year earlier - the worst showing since the depth of the global crisis - from 7.3 percent in the previous quarter, a Reuters poll showed.

China's growth tumbled to 6.6 percent in the first quarter of 2009 when millions of migrant workers lost jobs. A massive stimulus package pulled the economy out of the slump but at the cost of saddling local governments with a mountain of debt.

NAGGING FACTORY DEFLATION

Employment still holds up due to a faster-expanding services sector, but weaker growth and nagging factory deflation could force more manufacturers to cut jobs, analysts say.   Continued...

 
A man walks past mannequins at a wholesale market in Hefei, Anhui province, February 9, 2014. REUTERS/Stringer