BEIJING China's economic slowdown is expected to reach its nadir this quarter, with a recovery of momentum delayed until the final quarter, leaving growth for 2012 likely to fall below 8 percent, a level unseen since 1999, a Reuters poll showed.
Many economists lowered their forecasts for the world's second largest economy after weak July and August data, reflecting both external headwinds and domestic weakness.
The median forecast of 20 economists polled on Tuesday and Wednesday is for China to grow 7.4 percent in the July-September period from a year earlier, slowing for a seventh consecutive quarter, before picking up to 7.6 percent in the final three months.
The latest poll showed pessimism deepening from an earlier survey in July when there had been hopes of a quicker and stronger upturn, with forecasts for 7.9 percent year-on-year growth in the third quarter and 8.2 percent in the fourth.
It partly reflects some disappointment at the lack or more urgent policy action during the past two months to bring down the cost of credit by cutting interest rates or increasing the supply by cutting banks' required reserve ratios (RRR).
The once a decade change in the leadership of China's Communist Party, which may happen next month, has been cited as one of the reasons behind policymakers' reluctance to order further monetary easing while evidence of the delayed recovery piled up.
"There is still no sign yet that final demand across the economy has turned around," said Mark Williams and Qinwei Wang of Capital Economics in London. "Policy stimulus is showing up in stronger infrastructure investment but has not been large enough to offset the weakness elsewhere."
The latest survey's median forecast for 2012 growth was 7.7 percent, down from the July poll forecast of 8.0 percent, but still above the government's target of 7.5 percent.
Forecasts for 2013 were similarly lowered, with the latest survey pointing to 8.0 percent growth, compared with July's forecast of 8.4 percent.
Official third quarter data is due to be released on October 18. Growth slowed to 7.6 percent in the April-June period, from 8.1 percent in the first three months of the year.
Beijing cut interest rates in June and July, and has helped banks maintain their lending capability by reducing the portion of deposits they must hold in reserves, but investors had hoped for more action to ensure an early turnaround in fortunes.
In the absence of any stimulus package, Beijing has fast-tracked some infrastructure projects and injected cash into the economy via central bank's open market operations.
"Further policy easing is constrained as policymakers have been increasingly sensitive to rebounding home prices amid the leadership transition, while growth prospects for developed economies is getting worse," said Ting Lu at Bank of America Merrill Lynch in Hong Kong.
(Reporting by Langi Chiang, Xiaoyi Shao and Kevin Yao; Editing by Simon Cameron-Moore)