Top China forecaster sees third-quarter economic growth near zero

Top China forecaster sees GDP growth near zero in the third quarter of 2018.

Bloomberg - China s tough virus curbs mean economic activity in the third quarter could be close to flat compared with the previous three months, while full-year growth could fall below 8%, a top forecaster said.

My view is that the Chinese economy should slow sharply in the third quarter, mainly due to virus but also controls on property, said Christophe Barraud, chief economist at Market Securities LLP. Barraud was the top forecaster for China Economy during the last year of Bloomberg.

Barraud s projection for 0.3% growth in the July-September period from previous three months is below the median estimate of 1.1% in a Bloomberg survey of economists. He is also bearish on China s growth for 2021 compared to the market s median estimate of 8.4%.

It should be near 8% but with risks tilted to the downside, he said. If there is another outbreak in the fourth quarter, forecasts should be adjusted below 8%. The government has set a target of above 6% growth for the year.

Barrauds prediction came after monthly data showed Chinese economy slowed sharply in August with a slump in retail sales and property construction.

China introduced tougher new travel bans to stop an imported outbreak of the delta virus variant in late July. While the measures quickly brought the virus under control, a new cluster has developed in southern China this month, suggesting some restrictions will remain and consumers will continue to be cautious.

Risks are tilted to the downside because China will keep implementing zero tolerance policy concerning Covid - 19, particularly ahead of the Winter Olympics in February, Barraud said.

The French economist, said one of his favorite indicators of the Chinese economic activity at the moment is the daily number of domestic flights.

It s the most reliable data to catch the impact of restrictive measures, he said.

China is set to release gross domestic product data on 19 Oct. for the third quarter of its third quarter. In the second quarter, GDP rose 7.9% from the same period in 2020, and 1.3% from the previous quarter.

Barraud said his forecasting technique involves trying to collect as much data as possible, including from economical providers, before constructing a simple model with just five inputs for each predicted variable. Those forecasts are adjusted based on experience and comparison with competitors, he said.

For the remainder of the year, infrastructure investment and fiscal spending will be key variables indicating how much Beijing is trying to support growth, said He.

The focus will be more on public investment because everyone is waiting for public support, he said.