Beijing: China’s loss of economic momentum in the first quarter was deeper than the most widely-cited data will show, according to analyst forecasts for a gauge that’s gaining increasing recognition.
Gross domestic product (GDP) grew 1.5% from the previous three months, according to the median estimate in a Bloomberg News survey ahead of data released on Wednesday, down from 1.8% in the fourth quarter. That indicates a sharper deceleration than the median projection for 7.3% growth from a year earlier, down from 7.7%.
Investors are focused on the scale of a slowdown that prompted Premier Li Keqiang to provide what some analysts dubbed a mini-stimulus of spending and tax relief. While the indicator suffers from flaws including the government’s failure to give details of methodology, it provides an extra tool to analyze an economy that bond-fund manager Bill Gross calls the mystery meat of emerging markets.
The quarter-on-quarter data will show growth momentum has actually bottomed out in the first quarter, said Chen Xingdong, Beijing-based chief China economist at BNP Paribas SA, who previously worked at the World Bank. The measure has clearly captured the changes in growth momentum, Chen said.
While yuan forwards declined yesterday to the lowest level in eight months on concern growth is faltering, economists are picking a rebound this quarter and the State Council has outlined spending on railways and housing, and tax relief. Analysts see quarter-on-quarter expansion of 1.8%, according to a separate monthly survey in March.
Bloomberg’s survey of estimates for the first quarter-on- quarter GDP data in 2011 garnered only one forecast, from Goldman Sachs Group Inc In contrast, the latest poll had 17.
More and more private-sector economists are giving estimates and paying attention to it, said Andrew Polk, an economist in Beijing with The Conference Board, a New York-based research group.
At the same time, the indicator has limitations, Polk said. While most countries revise GDP numbers as more information becomes available, the National Bureau of Statistics does so without disclosing why or how, he said.
Lu Ting, head of Greater China economics at Bank of America Corp in Hong Kong, said frequent major revisions and seasonal-adjustment difficulties curtail the data’s reliability.
Still, amid a range of concerns about Chinese numbers — from inflated trade figures in 2013 to provincial GDP totals that add up to more than the national tally — the extra gauge is another tool for measuring the dynamism in the economy, said BNP’s Chen.
International companies are still betting on China for growth. Hennes & Mauritz AB, Europe’s second-biggest clothing retailer, is expanding into the nation’s smaller cities and Daimler AG said this month that the maker of Mercedes-Benz cars will add 100 dealerships for a network of 400 outlets in the nation by the end of this year.
The outlook may partly depend on how officials cope with financial strains after the onshore yuan bond market had its first default, by Shanghai Chaori Solar Energy Science & Technology Co.
China has yet to give annualized figures for sequential quarterly growth, which would result in figures that are more volatile than year-on-year numbers. Data compiled by Bloomberg based on the government’s figures showed annualized growth last year of 6.1% in the first quarter, followed by 7.4%, 9.1% and 7.4%.
It looks much less attractive for the government than year-on-year, which is stable and almost always above 7.5%, said Tom Orlik, a Beijing-based economist with Bloomberg LP and author of the 2011 book Understanding China’s Economic Indicators. BLOOMBERG