China’s economic growth is likely to slow to 5.7 percent in the final quarter of this year and remain broadly at that pace next year, even with increased stimulus from policymakers, according to Oxford Economics.
While policy easing since late last year has helped moderate the slowdown, the impact has been small, a report by Hong Kong-based Oxford Economics chief Asia economist Louis Kuijs said.
With the domestic economy slowing, [trade] conflict with the US and weak global trade momentum, “more policy easing is needed to convincingly stabilize economic growth,” Kuijs said.
China’s fiscal stimulus package has had less of a multiplier effect on lifting growth at home and abroad compared with previous easing, which was mainly focused on infrastructure and housing spending, the report said.
Demand for credit has stayed weak as the economy slows and the trade dispute escalates, but policymakers have remained reluctant to boost credit growth, it said.
Economic growth softened to 6.2 percent in the second quarter, the lowest pace in almost three decades and close to the lower end of the government’s full-year target of between 6 and 6.5 percent.
“We still expect growth to stabilize, but later than envisaged before and at a lower rate,” Kuijs said. “The key downside risk to this forecast is policymakers not stepping up the policy easing sufficiently.”
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