China’s economy probably grew the least in 10 quarters in the last three months of 2011 and may cool further as export demand slumps and officials prolong a campaign against property bubbles. Gross domestic product, the value of all goods and services produced, rose 8.7 percent from a year earlier, for the slowest pace since the second quarter of 2009, according to the median forecast of 26 economists surveyed by Bloomberg News. The data, and indicators for investment, retail sales and industrial production, are scheduled for release tomorrow in Beijing.
The fourth straight quarterly slowdown in the world’s second-largest economy adds to concerns that global growth is faltering, with the International Monetary Fund warning of near-zero growth in Europe and a “substantial” cut to its global expansion forecast. China’s exports rose the least in two years in December and inflation eased to a 15-month low, bolstering the case for Premier Wen Jiabao to stimulate growth.
“The worst is yet to come, and more easing measures will be in the pipeline in coming months,” said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc., who previously worked at the IMF. “Increasing downside risks in China will hurt the outlook for other economies especially commodities exporters such as Australia and Brazil.”
Growth may “trough” at 7.5 percent in the three months through March and 7.6 percent in the second quarter, Zhang said. That may prompt the central bank to “front-load” policy easing into the first half, with one interest-rate cut in March and three reductions to banks’ reserve requirement ratios, he said.
The central bank last month allowed lenders to set aside less money as reserves for the first time in three years to encourage lending. The move may have added 350 billion yuan ($55 billion) to the financial system, according to UBS AG estimates.
China’s money-market rate rose the most since September on Friday to 4.9 percent, as banks hoarded cash to meet increased withdrawals before the weeklong Lunar New Year holiday, which starts Jan. 23.
China’s benchmark stock index fell the most in a week on Friday as speculation waned that the government will reduce the reserve ratio before the festival.
