On October 18, 2021, a person looks at cranes in front of the Central Business District CBD in Beijing, China. BEIJING, January 16, Reuters -- China's economy likely grew at the slowest pace in 1 -- 1 2 years in the fourth quarter, dragged down by weaker demand due to a downturn in debt and strict COVID 19 measures, raising heat on policymakers to roll out more easing measures.
The data is expected to show gross domestic product GDP grew by 3.6% in October-December from a year earlier, the lowest pace since the second quarter of 2020 and slowing from 4.9% in the third quarter, according to a Reuters poll.
Growth is projected to increase to 1.1% in the fourth quarter from 0.2% in July-September.
GDP was expected to grow 8.0% for 2021, which would be the highest annual growth rate in a decade, due to the low base set in 2020 when the economy was jolted by COVID 19 and stringent lockdowns.
The GDP data, along with December activity data, is due to be released on Monday at 0200 GMT.
The world's second largest economy, which has cooled over the course of last year, is facing multiple challenges in the year 2022, including persistent property weakness and the recent spread of the highly contagious Omicron variant.
Exports, which were one of the few areas of strength in 2021, are expected to slow down while the government is seen continuing its clampdown on industrial emissions. Policymakers have pledged to head off a slower downturn ahead of a key Communist Party Congress later this year.
The central bank is expected to unveil more easing steps, but it will likely favour injecting more cash into the economy rather than cutting interest rates too aggressively, policy insiders and economists said. Analysts expect the central bank to deliver more modest easing steps, including cutting banks' reserve requirement ratios and cutting banks' reserve requirement ratios, the one-year loan prime rate LPR, the benchmark lending rate.
Analysts at ANZ said in a note that they saw a possibility that the central bank will cut the rate on its medium-term lending facility MLF on Monday.
Policymakers have pledged to step up fiscal support for the economy, increase bond issuance and plan for more tax cuts, as well as increase local government special bond issuance.
We may see a larger effect of the monetary and fiscal easing only in the second half of 2022, due to the transmission lags of these policies, analysts at Natixis said in a note.
The recent monetary easing and the stabilization of PMI factory activity have indicated such a direction, but more efforts are needed to boost fixed asset investment. According to the poll, growth is likely to slow to 5.2% in 2022.