As China's recovery wobbles, economists expect more policy easing
China may need more monetary and fiscal easing to halt an economic slowdown in the wake of torrential rains and flooding, and authorities' tough response to outbreaks of the highly-transmissible coronavirus Delta variant, economists say.
Nomura lowered its China GDP growth forecast on Wednesday to 5.1% in the third quarter and 4.4% in the fourth quarter, from 6.4% and 5.3%, respectively.
It also cut its full-year growth projection to 8.2% from 8.9%, citing the impact of Beijing's tough stance on COVID control due to the emergence of the coronavirus Delta variant in many major cities.
Policy insiders and analysts told Reuters that China is poised to boost infrastructure spending, while the central bank may take modest easing steps.
In a note, Goldman Sachs economists said they expect easing to focus on fiscal stimulus and government bond issuance, as well as a reserve requirement ratio (RRR) cut in the fourth quarter.
Standard Chartered, ING, OCBC Bank and Pinpoint Asset Management have also recently suggested possible further RRR reductions after the central bank surprised markets in July with a broad cut.
Reference: Reuters
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