FRANKFURT (Reuters) – China is set to report its weakest full-year growth figure in 25 years on Tuesday on the back of slowing output and sagging investments, troubling news that will likely dominate discussion at the European Central Bank and Bank of Canada policy meetings.
Economists said the expansion of the Chinese economy was held back by sluggish domestic and external demand, weak investments, factory overcapacity and high property inventories, which exacerbated deflationary pressures in the economy.
The poor figures bolster arguments for more Chinese monetary policy easing on top of the six interest rates cuts seen since November 2014 and suggest that more currency depreciation is coming to prop up corporate profitability, bad news for advanced economies.
An even weaker yuan will export China’s deflationary pressures to advanced economies that are already struggling with anemic price growth, amplified by a fall in oil prices to 12-year lows.
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