### Economic Outlook Dampened by Insufficient Stimulus Efforts, Capital Economics Reports
In the absence of a significant uptick in stimulus efforts, a meaningful cyclical recovery appears increasingly unlikely, according to economists at Capital Economics.
Recent official data revealed that industrial production saw a slower annual growth rate of 4.5% in August, compared to 5.1% in July. Similarly, retail sales growth decelerated to 2.1% from 2.7%. From January to August, fixed asset investment rose by 3.4%, slightly down from a 3.6% increase during the January to July period.
Julian Evans-Pritchard and Zichun Huang of Capital Economics noted that despite the service sector's relatively stable performance and pending fiscal support that should help stabilize broader growth in the coming months, additional stimulus measures are essential for a significant cyclical recovery.
They highlighted that the manufacturing sector is under considerable pressure, even as there are early signs of moderating downward pressure on construction activity.
Furthermore, the economists expect an increase in infrastructure spending, spurred by the recent acceleration in government bond issuance. They suggested that policymakers, with their cautious approach to stimulus, might only be able to prevent further declines in growth in the short term.
Beijing aims for approximately 5.0% growth this year. In the June quarter, the second-largest economy grew by only 4.7%, following a 5.3% expansion in the preceding period.
