Asia’s stocks are dropping after a report released Friday showed that China’s economic growth has slumped to 6.5 percent, the slowest it’s been since 2009, the National Bureau of Statistics said.
Despite forecasts from analysts, the economy failed to reach the desired 6.6 percent, falling behind the progress made in the second quarter, Reuters reports.
On a quarterly basis, growth slowed to 1.6 percent from a revised 1.7 percent in the second quarter, in line with expectations of 1.6 percent growth. However, the final percentage was the result of two previous revisions to the year’s economic growth expectation.
“It's very clear that China's economy is on a very soft footing at this moment and in the meantime, we do see there are a lot of bearish sentiments towards China's economic outlook, as well as the financial market outlook," said Hao Zhou, a senior economist at Commerzbank.
Recent economic data suggests the economic shortcomings may be due to the fall in domestic demand, to factories taking less financial ventures and foregoing infrastructure investment and consumer spending, as a multi-year crackdown on riskier lending and debt has pushed up companies’ borrowing costs.
Separate data Friday showed China’s factory output growth — the weakest it’s been since 2016 — slowed to 5.8 percent in September from a year earlier, missing expectations while fixed-asset investment expanded at a slightly faster-than-expected 5.4 percent in the first nine months of the year.
Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia, said, "The combination of slower global economic growth, ongoing US-China geopolitical/trade concerns and the increased likelihood the FOMC raises the funds rate by more than is currently discounted (75bps over the next 12 months) is weighing on investment sentiment."
Economists expect China’s full-year growth to come in at 6.6 percent this year, comfortably meeting the government’s 6.5 percent target, and 6.3 percent next year.