China’s GDP growth may slow to 6.8% in H1, rise to 7% in H2
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CHINA’S gross domestic product growth may slow to 6.8 percent in the first half of 2015 as investment in property weakens and the government’s income from land transaction fees dwindles, Germany’s biggest bank said yesterday.
“A further cool down in economic growth will show clearly in the first two quarters before rising to about 7 percent in the second half of the year due to government’s stimulus measures,” said Zhang Zhiwei, chief China economist and head of China equity strategy at Deutsche Bank, in a report.
Zhang added the German bank expects two more interest rate cuts and two more reductions in bank reserve requirement ratio this year.
The report also suggests government revenues may fall as the state expects to receive less income from land transaction fees and the bank sees this as the biggest risk for China’s economic growth in 2015.
Government receipts may show its first negative growth in the first quarter and post its slowest pace since 1981, the bank warned.
China’s economic growth eased to a five-year low of 7.3 percent in the third quarter of last year, down from 7.5 percent in the second quarter, as the property sector declined.
Although property sales have turned positive and credit has grown strongly in December, Wang Tao, chief China economist at UBS, pointed out in a report yesterday that new property starts and manufacturing investment were frail, reflecting a still weak domestic demand.
Wang expects fourth quarter GDP to fall further to 7.1 percent annually, taking full year growth to 7.3 percent. He sees China’s consumer price index at 1.4 percent in December.
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