Rate cuts expected with China growth at slowest since 1990

 
Chris Papadopoullos
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The People’s Bank of China last cut rates on 21 November to 5.6 per cent from six per cent
CHINA’S economic growth has slowed to its weakest pace for 24 years, official figures released yesterday show.

The economy grew by 7.4 per cent last year. In the final three months of the year the economy grew by 7.3 per cent year-on-year.

“The recovery in China’s construction activity, which is the main driver of domestic demand and commodities, is sluggish,” said economist Fredrik Skoglund from Swedish bank SEB.

“We believe that this weakness will keep China’s GDP growth relatively low in 2015 and keep commodity prices in check.”

While 7.4 per cent growth is high by most economies’ standards, China has struggled to get near its pre-recession growth rates of over 10 per cent.

Further data released yesterday showed that China’s retail sales climbed 11.9 per cent in 2014 while factory output rose 7.9 per cent. “We expect growth to slow again in the first quarter of 2015,” said economist Craig Botham from asset manager Schroders. He expects China to cut rates this year.

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