China’s GDP growth to ease to 7.2 pct in 2015: report

China will see gross domestic product (GDP) growth ease to 7.2 percent next year when the government might further cut interest rates to spur the economy, said a forecast from Bank of China.

The state-owned lender released its 2015 Global Economic and Financial Outlook Report this week, saying factors including overcapacity pressure in some industries and adjustment in the property sector would continue to act as drags on China’s economy.

The bank predicts the nation’s economy will have grown by 7.4 percent in 2014, missing the target of 7.5 percent set by the central government earlier this year. The 7.4-percent expansion, if realised, would be the Chinese economy’s most sluggish performance since 1991.

But Chen Weidong, a senior researcher of the bank, was quoted in the report saying: “Generally speaking, the [Chinese] economy remains in a reasonable range and there are signs of improvement.”

The report also said the Chinese central bank will continue its “prudent” monetary policy but there is a “rising probability” that it will lower its interest rates and its reserve requirement ratio once or twice next year. The reserve requirement is the portion (usually expressed as a percentage) of depositors’ balances that banks must keep on hand as cash.

The People’s Bank of China announced last month the first interest rate cut in China in more than two years, helping to lower private financing costs to boost the economy.