China’s economy grew at its slowest pace in 18 months in the first quarter of 2014, official data showed on Wednesday, with signs of waning momentum already prompting limited government action to steady the world’s second-largest economy.
Authorities have ruled out major stimulus to fight short-term dips in growth, and some analysts think the economy will continue to lose momentum into the middle of the year.
The economy grew 7.4 percent in the January-March quarter from a year earlier, slightly stronger than the median forecast of 7.3 percent in a Reuters poll but still slowing from 7.7 percent in the final quarter of 2013.
It was China’s slowest annual growth since the third quarter of 2012, when growth was also 7.4 percent.
Economists were split on the outlook, with some predicting that growth had stabilized and that the government would stand pat on policy. Others, however, thought that policy loosening was imminent.
“Policymakers seem pretty comfortable with the current pace of growth,” said Julian Evans-Pritchard, an economist at Capital Economics in Singapore. “I don’t think they’re going to announce any further significant measures to support growth.”
Beijing has announced some modest measures, such as tax cuts for small firms and speeding up some investment in rail projects, to try to steady growth around its target of 7.5 percent without disrupting plans to restructure the economy.
MIXED MARCH DATA
March activity data, released at the same time as the GDP figures, showed factory output grew 8.8 percent from a year ago, slightly below forecasts for 9 percent expansion.
Fixed asset investment rose 17.6 percent in the first three months of the year, also weaker than forecasts for a 18.1 percent rise.
Retail sales was the only indicator that beat expectations by a shade with an annual increase of 12.2 percent, compared to predications for a 12.1 percent gain.
“It’s not bad enough to change monetary policy, but forward indicators suggest that in the next few months we will see more aggressive easing,” said Stephen Green, an economist with Standard Chartered in Hong Kong.
Figures for March already released have done little to ease concerns that the economy is losing more momentum.
Exports fell for the second month in a row and imports dropped sharply in March, while money supply grew at its slowest annual pace in more than a decade. Official and private surveys also show the manufacturing sector continuing to struggle.
(Additional Reporting by Kevin Yao; Editing by John Mair and Mark Bendeich)