China growth rate lowest since 1991, headwinds remain: BBVA tips 7% for 2015

HONG KONG - China’s fourth quarter GDP growth has come in at 7.3% y/y, flat with that of the previous quarter and broadly in line with market expectations (consensus: 7.2% y/y). In sequential terms, Q4 GDP expanded at a pace of 1.5% q/q sa, decreasing from 1.9% q/q sa in Q3. As a consequence, 2014 GDP increased by 7.4%, the lowest growth rate since 1991.

A number of activity indicators in December were also released today, including industrial production, urban fixed asset investment and retail sales, which are broadly in line with market expectations.

BBVA Bank comments that all in all, a soft-landing is achieved again in 2014 thanks to Government pro-growth measures. “Nevertheless, we believe the growth outlook is still subject to a number of headwinds, such as the sluggish property market, the increasing indebtedness of local governments and firms, as well as continuous expansion of the shadow banking sector,” BBVA says.

“In view of this, our 2015 GDP projection is kept at 7.0% as before. On the policy front, we anticipate more conventional monetary easing will be implemented in 2015 to sustain domestic demand and prevent a hard-landing. www.bbvaresearch.com (ATI).