China posted a 6.9 percent GDP in the third quarter of this year to register its weakest growth since the 2009 global financial crisis which could prompt the leadership to roll out a fresh stimulus package to arrest the slowdown of the world’s second largest economy.
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The euro traded at its lowest level against the dollar in 10 days Monday after official data showed that economic growth in China was stronger than economists’ expected in the third quarter.
Hong Kong’s Hang Seng China Enterprises Index slipped 0,1 percent on Monday after rising 2.2 percent last week.
The global Monetary Fund forecast China to grow 6.8% this year, while the World Bank expects the nation to achieve its estimated growth target.
“There is no denying the wider point that China is not about to let the economy slide into 6.0-6.5 per cent growth territory, with adverse and visible impact on jobs”, said Vishnu Varathan of Mizuho Bank in Singapore in a market commentary.
Economists were expecting the growth rate to ease to 6.8 percent. “We do have concerns about the Chinese economy, and we are working hard to address them”. This has been going on for a few time though so we shouldn’t be entirely surprised that it didn’t fall short of the 7% target by more.
China has already cut interest rates five times in a year and reduced the amount of cash banks need to hold to boost lending, but that stimulus has yet to be seen substantially driving real economic growth.
“The government’s measures helped dampen the downside pressures but the problem is that these pressures on growth are actually pretty severe”, Louis Kuijs of Oxford Economics told the BBC.
Retail sales, a key indicator of consumer spending, increased 10.9 percent in September, the government said, marginally ahead of expansion the previous month.
Clearly the government are turning on the fiscal spending taps to shore up flagging economic growth.
A few market watchers believe current growth is much weaker than government figures, though officials deny allegations that the numbers are inflated.
Tumbling oil prices, reflecting China’s slower growth, contributed to a contraction in Canada’s economy for two straight quarters – the technical definition of a recession.
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Still, the expansion was slightly stronger than a median 6.8% forecast by 13 economists in a Wall Street Journal survey.
