China Q2 GDP growth 7.6pc, slowest in 3 years
BEIJING, July 13 — China’s economy grew 7.6 per cent in the second quarter of 2012 from a year earlier, its slowest pace in three years, confirming expectations of a downward trajectory that leaves full-year growth on course for its softest showing since 1999.
The GDP number released today, which was in line with a Reuters poll, marked the sixth straight quarter of easing growth and left analysts combing a raft of accompanying data to assess whether the second quarter marks the bottom — or an extension — of the downward cycle.
The data is crucial for investors facing a slowdown not only in China, the world’s second-largest economy, but anaemic growth across the BRIC grouping of major emerging economies — Brazil, Russia, India and China — which combine as the biggest marginal generators of global growth.
“I think the 7.6 per cent rise in GDP is largely priced in by the market and it partially alleviates some worries that the economy may plunge below seven per cent,” said Jiang Chao, an analyst at Guotai Junan Securities in Shanghai.
“But the figure is close to the alarming line of 7.5 per cent set by the government, which means Beijing will intensify its efforts to further ease its policy to bolster growth.”
Other data released alongside GDP revealed fixed asset investment growth was 20.4 per cent in the year to June versus the 20.1 per cent forecast in the benchmark Reuters poll.
Retail sales in June were up 13.7 per cent on a year ago versus May’s 13.8 per cent and industrial output grew 9.5 per cent versus expectations of 9.8 per cent.
Asian share prices and emerging Asian currencies firmed modestly after the data.
Markets fear sharper slowdown
Inflation and trade data earlier this week showing fast-easing consumer prices, outright deflation in producer prices and import growth at less than half the rate expected in June sent a bearish shiver through financial markets.
Two interest rate cuts in the space of a month, accompanied by liberalisation moves allowing banks to discount borrowing costs by a further 30 per cent, had already fuelled investors’ fears that China’s economy may be slowing more sharply than expected — jeopardising even Beijing’s official full year GDP growth target of 7.5 per cent.
Companies on at least three continents have blamed slowing Chinese growth for their worsening performance.
This week alone, British fashion brand Burberry reported a decline in its China sales growth, US chipmaker Advanced Micro Devices warned of disappointing Q2 revenue because of softer than expected sales in China and Europe and China South Airlines said its H1 net profit would likely fall in part on slower domestic growth.
Economists remain divided about when China’s economy will reach the bottom of its current cycle, with many preparing to take the scalpel to full-year forecasts which, according to the last Reuters consensus poll in April, call 2012 growth at 8.4 per cent.
The Asian Development Bank cut it full-year China growth expectations for 2012 to 8.2 per cent in new forecasts published yesterday, down from the 8.5 per cent they had estimated in April. — Reuters