Economists surveyed by Bloomberg expect China’s economy to grow 5% in the third quarter of 2021, a slowdown from a 7.9% gain in the previous quarter. The world’s second-largest economy is taking hits from multiple whammies, including a crackdown on the property market, severe power outages, stringent COVID-19 controls, and surging commodity prices. Nomura economists said China’s full-year growth could slow down to as low as 7.7%, impacting other economies in Asia and other parts of the world.
China has stepped up a crackdown on the property market to curb financial risks, prompting a sharp decline in construction and worsening Evergrande’s debt crisis. The combined sales of the country’s top 100 developers plunged 36% year-on-year in September, which is typically a home sales peak season. Meanwhile, real estate investment is estimated to have shrunk 9.5% year-on-year in the first nine months of the year. Goldman Sachs warned that China’s property slowdown could have a knock-on effect on the broader economy.
Soaring energy prices and power outages have led to operation reductions and suspensions in some factories. In September, China’s manufacturing purchasing managers’ index fell for the first time since the COVID-19 pandemic started. Economists surveyed by Bloomberg estimated China’s industrial output to have risen 3.9% in September, the slowest pace since April 2020.
At the same time, Beijing’s zero-tolerance approach toward COVID-19 has dampened consumers’ spending and confidence. However, some provinces have begun easing restrictions since late August, allowing the service industry to stage a stronger-than-expected recovery last month. Retail sales growth is seen to have grown 3.5% in September, accelerating from 2.5% in the prior month.
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Published on October 18, 2021 1:19 PM (GMT+8)Last Updated on October 18, 2021 1:19 PM (GMT+8)
