Beijing: China’s economy could end 2008 with its weakest growth in nearly two decades, economists said Tuesday, following the release of data for November that was far worse than expected.
A string of stimulus measures are likely to not fully kick in until the second or third quarter of 2009, making the last quarter of this year and the following three months the toughest to pull through, they said.
A range of economists contacted by AFP forecast growth of between five to 6.5% in the fourth quarter of this year.
“Our forecast is rather pessimistic,” said Tao Dong, an analyst with Credit Suisse in Hong Kong, who forecast growth in the final three months of 2008 to be six to 6.5%.
He said China had not posted growth that low since the country began publishing quarterly economic data in 1995.
Before that, the country recorded full-year growth of 3.8% in 1990.
It then roared into gear and never again posted annual growth of less than 7.6%, even during the Asian financial crisis.
Xing Ziqiang, a Beijing-based economist with China International Capital Corporation, backed Tao’s assessment that the last three months of 2008 would likely see the worst economic growth since records began, and possibly longer.
Xing forecast growth of five to 5.5% in the final quarter.
China published a series of economic data for November over the past week that showed the world’s fourth largest economy was feeling the impacts of the global crisis much harder than initially expected.
Among the chief concerns, exports posted their first fall in more than seven years, dropping 2.2% in November after growing 19.2% in October.
The inflation rate also dropped abruptly to a 22-month low of 2.4% in November from 4.0% in October, reversing worries on soaring prices seen early this year and raising the spectre of deflation.
Meanwhile, industrial output growth eased dramatically last month to 5.4%, compared with this year’s peak of 17.8% in March.
The latest data, released on Tuesday, showed urban fixed asset investment -- a key measure of spending on productive capacity -- rose 26.8% from January to November, down 0.4% points from the first 10 months.
Beijing has taken many measures to boost domestic demand and cushion the impact of collapsing export markets, including four interest rate cuts since September that reduced the one-year lending rate from 7.47% to 5.58%.
A $586 billion stimulus package was also announced in November that focused heavily on big infrastructure projects.
In its latest effort, the government said over the weekend it would raise money supply by 17% next year.
However economists said it would take many months for the impacts of such measures to kick in, with much of the new spending on projects such as railway construction.
Amid this backdrop, the government is expected to act again soon.
Chinese central bank governor Zhou Xiaochuan said on Tuesday there was room for more interest rate cuts, indicating another one could come late in December or early next year.
More plans to cut taxes, increase credit to small and medium-sized companies and subsidise low-income families are also likely to come out, depending on how the economy responds to current stimulus measures, economists said.
Nevertheless, China’s economy, after posting double-digit growth for the past five years, is still widely forecast to absorb the global crisis better than much of the rest of the world.
Huang Yiping, an economist with Citigroup in Hong Kong, forecast growth of 8.2% in 2009, and said the stimulus measures were an important factor.
“It would be even lower without the policies,” he said.
BNP Paribas has forecast an expansion of 7-8% for China’s economy next year.