According to s survey of more than 40 economists conducted by Reuters, the Chinese economy is likely to have halved in the first quarter of 2020 when compared to the final quarter of 2019, which is likely to prompt earlier interest rate cuts.
“Forecast growth to fall to a median of 3.5% this quarter from 6.0% in the fourth quarter of 2019, a full percentage point lower than predicted in a Feb. 14 poll.
The range of views was wide, from two banks saying no growth at all to one saying 5.0%.
Under a worst-case scenario, the median forecast for Q1 was 2.4%, compared with 3.5% in the previous poll – essentially meaning the worst-case view from three weeks ago is now the central scenario for private sector economists.
Growth is still expected to bounce back in Q2, to 5.6%, slightly lower than the 5.7% forecast three weeks ago. But even there, the range of forecasts was wide, 3.7%-6.5%.
The People’s Bank of China is now forecast to reduce the one-year loan prime rate (LPR) the benchmark lending gauge it introduced in August 2019, to 3.85% from the current 4.05% by the middle of year. Previously it was not expected to fall that far until the first quarter of 2021.”