China's economy likely to slow at its slowest pace this year

BEIJING, Oct 18 Reuters -- China's economy likely grew in the slowest pace in the third quarter of this year, hurt by power shortages, supply bottlenecks and sporadic COVID - 19 outbreaks and raising heat on policymakers amid rising jitters over the property sector.

Data released on Monday is expected to show gross domestic product GDP grew 5.2% in July-September from a earlier - weakest pace since the second quarter of 2020 - which was weaker than 7.9% in the third quarter, Reuters poll showed.

That would mark a further deceleration from the expansion of 18.3% in the first quarter, when the year-on-year growth rate was heavily affected by low comparison on the very low contrast seen during COVID's earlier slump of early 2020.

On a quarterly basis, growth is forecast to ease to 0.5% in July-September from 1.3% in the second quarter, poll showed.

The World's second largest economy has recovered from the pandemic but the recovery is losing steam, weighed by stabilizing factory activity, persistently soft consumption and a slowing property sector as policy curbs bite.

The potentially faster than - expected economic slowdown, driven by the power shortage and the contagion effect owing to a potential Evergrande default, will require further looser monetary policy, Citi economists stated in a note.

Global worries about a possible spillover of credit risk from China’s property sector into the broader economy have also intensified as major developer China Evergrande Group wrestles with more than $300 billion in debt.

Chinese leaders, fearful that a persistent property bubble could undermine the country's long-term ascent, are likely to reduce costs on the sector even as the economy slows, but will soften some tactics as needed, policy sources and analysts said.

Premier Li Keqiang said on Thursday that China has ample tools to deal with economic challenges despite weak growth, and is confident of achieving full-year development goals.

Analysts polled by Reuters expected the PBOC to keep Reserve Require Ratio RRR unchanged in the first quarter before cutting another 50 basis points in the fourth quarter of 2022.

China releases third quarter GDP data on Monday 01:00 GMT along with September factory output, retail sales and fixed-asset investment data in September.

The September output is expected to increase from one year earlier - the lowest since May 2020 - using January for the first time. Retail sales are anticipated to pick up to 2.5% from 3.3% in August.