BEIJING (Reuters) - China’s economy is likely to grow at its slowest pace in 24 years this year and will cool further in 2015, weighed down by a cooling property sector and factory overcapacity and as top leaders push structural reforms, a Reuters poll showed.
Growth in the world’s second-largest economy slowed from 7.5 percent earlier in the year to 7.3 percent in the third quarter, which was the weakest since the global financial crisis.
A similar pace is expected in the current quarter, leaving full-year growth at 7.4 percent, just shy of the government’s target of 7.5 percent.
The median estimate from 41 analysts, most of whom are based outside of China, predicts growth will slip further to 7.1 percent in 2015. The weakest forecast was for 6.5 percent and the highest 8.0 percent.
A senior government economist said on Friday the economy was likely to grow by 7.4 percent this year, and 7 percent in 2015.
“We expect the policy stance to remain supportive of growth, through the stimulation of infrastructure investment, further relaxing of property market policies and more ‘targeted’ monetary easing steps,” Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong.
“However, we think policymakers will not resort to more significant and higher profile measures unless growth takes another turn for the worse. If it does, we can imagine more significant measures, including a cut in benchmark lending rates.”
The majority of a smaller sample of economists said the central bank would keep interest rates unchanged over the coming year, with the benchmark one-year lending rate seen remaining at 6 percent until the end of 2015. Benchmark one-year deposit rates were also seen unchanged at 3 percent.
Data on Friday showed Chinese home prices fell for the fifth straight month in September, wiping out a year’s gains, reinforcing expectations that the government will have to roll out fresh stimulus to avert a sharper slowdown.
Accounting for about 15 percent of China’s economy, the property cooldown has crimped demand in 40 sectors ranging from steel to cement and furniture, becoming the single biggest drag on domestic activity.
Policy measures so far this year include accelerated construction of railway and public housing projects, cuts in reserve requirements (RRR) for some banks and loosening of property controls by some local governments to support the housing market.
Premier Li Keqiang has stated repeatedly that authorities will tolerate growth slightly below the 2014 official target as long as the labor market remains healthy and as the government tries to reshape the economy so it is driven more by domestic consumption and less by exports and investment.
Li told delegations to an Asia-Pacific Economic Cooperation (APEC) finance ministers’ meeting this week that despite improvement in employment reforms will take time.
In line with moderating economic activity, consumer price pressures are forecast to remain subdued. Annual inflation is seen running at 2.3 percent in 2014, well under the government’s 3.5 percent target.
China’s current account surplus is also expected to hover at 2.3 percent and 2.4 percent of GDP this year and next respectively, comfortably below the 4 percent mark proposed by former U.S. Treasury Secretary Timothy Geithner as a level that indicates a balanced economy.
Polling by Shaloo Shrivastava in Bangalore; Writing by Judy Hua and Kevin Yao in Beijing; Editing by Ross Finley & Kim Coghill