China's GDP falls to 6.9% in Q3, weakest since 2009

Source: PTI

China's GDP decelerated to 6.9% in the third quarter of this year, posting its worst growth since the 2009 global financial crisis which could prompt the Communist giant to roll out a new stimulus package to arrest the slowdown of the world's second largest economy. China's economy slid below the targeted 7% in the third quarter this year, the weakest since the global financial crisis in 2009 amid continued fall of exports mounting pressure on the country's economy. The economy posted a 6.9% growth year on year in the third quarter of 2015, lower than 7% in the first half of the year, China's National Bureau of Statistics (NBS) announced on Monday. The government has set 7% as the GDP target for this year. In the first three quarters of the year, GDP hit 48.78 trillion yuan ($7.68 trillion) up 6.9% year on year, according to the NBS. This is the first time the quarterly growth rate had dropped under 7% since the second quarter of 2009. NBS spokesperson Sheng Laiyun said global factors amid the world economic recovery had impacted China. “Expectation of a US interest rate hike prompted volatility in commodity prices, stocks and foreign currency markets. Many countries devaluated their currencies, putting more pressure on Chinese exports, one of the three pillars of China's economic growth,” Sheng told a media briefing. China's exports growth dropped 7.9% year on year in the first three quarters to 17.87 trillion yuan, according to the NBS. During the first nine months, industrial output grew 6.2% year on year and fixed-asset investment climbed 10.3%. Property investment grew 2.6% year on year, while retail sales of consumer goods rose 10.5%. As the exports continued to fall, Chinese economy is undergoing transition from an export dependent economy to the one based more on domestic consumption which is causing a painful transformation. Observers say while the 6.9% GDP was regarded as slightly above expectations, the continued slowdown was expected to put pressure on the government data and is expected to raise pressure on policymakers to step up monetary policy to halt the slowdown. This quarter, the economy suffered a series of shocks from extreme volatility of the Chinese stock market which at one time wiped out $3.2 trillion worth of capital causing mass desertion of new investors. Analysts say the third quarter could prompt a roll out of stimulus measures. “The government's measures helped dampen the downside pressures but the problem is that these pressures on growth are actually pretty severe,” Louis Kuijs of Oxford Economics told the BBC. “What keeps China going at the moment is consumption but this cannot fully offset those negative pressures on growth and therefore - even though we see some stimulus coming from the government and we see that having some impact - it's not enough to prevent growth from sliding further,” he said. Economists are continuing to call for more government action, as volatility in the stock markets sparks concerns of financial turmoil and potential social unrest.  

October 19, 2015 | 5:57pm IST.