China’s economy is expected to slow down sharply in the third quarter, with the GDP data out next week to demonstrate the impacts of the government’s crackdown on the property market, a stringent control over the pandemic, the power crisis, and sluggish consumption.
The Chinese government is scheduled to announce its gross domestic product data on Monday, Oct. 18. Analysts in a Bloomberg poll have on average estimated that the world’s second-largest economy would expand at 5%. Natixis even offered a more bearish outlook, predicting a slump to 4.9% growth for the third quarter.
That number would exhibit a slowdown from the second quarter when China’s economy grew at 7.9%.
According to Bloomberg, China has been reeling from a series of shocks.
The country’s real-estate gross sales and costs are falling as Beijing cracked down on the property market to tackle financial risks.
Meanwhile, last month’s power shortage curbed manufacturing activities, pushing the purchasing manager’s index (PMI) down enough to signal a manufacturing contraction for the first time since the COVID-19 pandemic started.
“China’s GDP data are likely to confirm a sharp deceleration in growth in the third quarter, as a confluence of shocks—delta variant outbreaks, an acute energy shortage and regulatory tightening—batter the economy,” Bloomberg Economics said.
In a speech on Oct. 14, Chinese Premier Li Keqiang gave assurances, saying China has “risen up to the challenges,” including overcoming extreme floods.
He said that China’s growth “leveled off a little bit” in the third quarter, “but for the whole year, we have the confidence and the ability to meet our overall development targets.”
Beijing has set the full-year growth target of 6% or above this year.
However, that target seems to be too ambitious, as seen by HSBC. According to South China Morning Post, the bank said China’s GDP growth is likely to slow markedly to the 4-5% range in the rest of the year amid multiple headwinds.
China’s deceleration is expected to ripple throughout Asia and the world, knocking commodity markets like metal and iron ore.