China's economy grew at its slowest in nearly three years in the first three months of 2012, with a weaker than expected reading raising investor concerns that a five-quarter long slide has not bottomed and that more policy action would be needed to halt it.
The annual rate of GDP growth in the first quarter slowed to 8.1 per cent from 8.9 per cent in the previous three months, the National Bureau of Statistics said today, below the 8.3 per cent consensus forecast of economists polled by Reuters.
The GDP data headlined a flurry of indicators published today showing March industrial output expanded 11.9 per cent, March retail sales rose 15.2 per cent and quarterly fixed asset investment, one of the principal drivers of China's economy, grew 20.9 per cent.
They were broadly in line with the conservative expectations of investors who have grown concerned in recent weeks that the bottom of China's economic cycle would extend into the second quarter of the year as it struggles to escape its worst sequential slowdown since the 2008/09 global financial crisis.
"What's clear is that the economy is still decelerating and the property sector clearly is deflating," said Yao Wei, China economist at Société Génerale in Hong Kong.
"Looking at the property data, it seems that property investment has finally started to correct. I think this trend will continue and will drag growth even lower in coming months so we don't think this is the bottom yet. It means more monetary easing will be needed to prevent a sharper deceleration."
Residential real estate investment in March grew at its slowest annual rate since mid-2009, when policymakers in the world's second-biggest economy were rolling out stimulus measures to escape the grip of a financial crisis that had driven global trade to a virtual halt.
Real estate investment was worth about 13 per cent of China's gross domestic product in 2011 and the sector directly affects more than 40 industries, making Beijing's two year-long campaign to curb rampant property speculation one that has been felt across the economic spectrum.
Reuters
