© Reuters. FILE PHOTO: Men stand on a balcony overlooking the central business district in Beijing
By Kevin Yao
BEIJING (Reuters) – China’s economic recovery likely accelerated in the fourth quarter, driven by stronger demand at home and abroad and policy stimulus which is expected to provide a solid boost into 2021.
The world’s second-largest economy is expected to have grown 6.1% in October-December from a year earlier, after the third quarter’s 4.9% expansion, the median forecasts of 46 economists polled by Reuters showed.
The economy has been recovering steadily from a steep 6.8% slump in the first three months of 2020, when an outbreak of COVID-19 in the central city of Wuhan, first detected in late 2019, turned into a full blown epidemic.
“The good performance of the last quarter signaled a better outlook for the Chinese economy for the upcoming 2021,” Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, said in a note.
Some analysts cautioned that a rebound in coronavirus cases in China and renewed lockdowns in some areas could impact consumption heading into next month’s Lunar New Year holidays.
On a quarterly basis, growth likely picked up to 3.2% inOctober-December from 2.7% in the pervious quarter, the poll showed.
China will release fourth-quarter and 2020 gross domesticproduct (GDP) data on Monday (0200 GMT), along with Decemberfactory output, retail sales and fixed-asset investment.
Industrial output may have grown 6.9% in December from a year earlier, easing from a 7.0% rise in November, while retail sales could rise 5.5% in December, quickening from November’s 5.0%.
Fixed-asset investment is forecast to rise 3.2% in 2020, versus 2.6% in the first 11 months, according to the poll. Data on Thursday showed Chinese exports grew by more than expected in December, as coronavirus disruptions around the world fuelled demand for Chinese goods even as a stronger yuan made exports more expensive for overseas buyers.
China’s economic growth is expected to quicken to 8.4% in 2021 from 2.1% in 2020, before slowing to 5.5% in 2022, as the central bank is likely to keep interest rates steady, a separate Reuters poll showed.
While the predicted growth for 2021 would be the strongest reading in a decade, led by a big jump in the first quarter, it is rendered less impressive coming off the low base set last year.
Chinese leaders at a key agenda-setting meeting last month pledged to maintain “necessary” policy support for the economy this year, avoiding a sudden policy shift.
China’s central bank governor, Yi Gang, said last week it would prioritise stable monetary policy in 2021, and any steps to exit stimulus measures would have little impact on the economy, Xinhua news agency reported.
The PBOC has rolled out a raft of measures since early 2020 to support the virus-hit economy, alongside targeted support for small firms and increased government spending on infrastructure.
(Polling by Vivek Mishra and Manzer Hussain in Bengaluru and Jing Wang in Shanghai; Reporting by Kevin Yao; Editing by Simon Cameron-Moore)