China’s GDP growth may drop to 5% or even lower in Q1 - Government Economist
|China's first-quarter gross domestic product (GDP) growth rate may drop to 5% or even lower due to the coronavirus outbreak, forcing policymakers to introduce more stimulus measures, Zhang Ming, an economist at the Chinese Academy of social sciences – a top government think tank, said on Wednesday, according to Caijing magazine.
Zang's forecast is based on the assumption that the outbreak will peak in early to mid-February and end by the end of March. The dismal growth projections could weigh over risk assets, helping safe havens like gold and yen score gains.
Key quotes
The fast-spreading virus could cut first-quarter GDP growth by about 1 percentage point.
Coronavirus' impact on the economy could be significantly bigger than that of Severe Acute Respiratory Syndrome (SARS), which originated in 2002.
The jobless rate could exceed 5.3% in the coming months, putting pressure on the government to step up policy support, which in turn could boost the annual budget deficit as a share of GDP to over 3% in 2020.
The People’s Bank of China could further cut banks’ reserve requirement ratios and interest rates.
China’s growth slowed to a near 30-year low of 6% in the fourth quarter of 2019. The growth was expected to pick up with the continued easing of US-China trade tensions. The two nations signed the highly-anticipated phase-one trade deal earlier this month.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.