China’s economic growth seen hitting 44-year low in 2020, bounce 8.4% in 2021: Reuters poll

China’s economy is expected to grow at its weakest pace in over four decades even as it steadily recovers from a coronavirus-induced dive earlier this year, but overall output could rebound sharply in 2021, a Reuters poll showed. The world’s second-biggest economy is now expected to expand by 2.1% in 2020, according to the median of 37 analysts surveyed by Reuters, down slightly from the 2.2% growth projected in the last poll in July.

That would make China the only major economy to grow in 2020, albeit at the slowest annual pace since 1976, the final year of Mao Zedong’s Cultural Revolution. China’s economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth highlighted some persistent risks including from resurgent COVID-19 cases globally and ongoing tensions with the United States over a range of issues.

The poll forecast fourth-quarter GDP to rise 5.8% year-on-year, quickening from 4.9% in July-September. Growth is projected to pick up to 8.4% in 2021, as the global economy is set to recover from the health crisis, according to the poll. The economy has been recovering steadily from a steep 6.8% slump in the first quarter, when it was jolted by the pandemic.

But China faces long-term obstacles to maintain its ascent, analysts say. Its top leaders are holding a key meeting to chart the country’s economic course for 2021-2025, amid rising tensions with the United States on trade, technology and other fronts, threatening a decoupling of the world’s two largest economies.

Analysts expect China will keep its one-year loan prime rate (LPR) steady at 3.85% until the end of 2021. The central bank kept the LPR unchanged for the sixth straight month at its October fixing, after cutting it by a total of 46 bps since last August. The poll also predicted no change to the benchmark deposit rate until the end of 2021. The PBOC has kept it untouched at 1.5% since October 2015. China’s consumer price index (CPI) in 2020 will likely rise 2.7% from the previous year, slowing from a 2.9% rise in 2019, CPI is expected to rise 2.1% in 2021, according to the poll.

China’s economic growth seen hitting 44-year low in 2020, bounce 8.4% in 2021: Reuters poll, Reuters, Oct 27