China‘s economy stuttered unexpectedly in April with lower than expected output data, softening retail sales and easing prices suggesting economic headwinds might be stiffer than thought, requiring more robust policy responses to counter them.

Industrial output expanded at its slowest annual pace in April in nearly three years, while fixed asset investment growth dipped to its lowest in almost a decade.

The weak growth in fixed asset investment signalled that the impact of a prolonged credit crunch in China’s real estate sector, and of flagging demand from export markets, was more severe than first thought.

In fact, new loans in April were well below what most market observers had expected, helping to explain continued tight conditions for businesses and developers despite the gentle easing espoused by Beijing.

“The data suggests further deceleration of the economy at the start of Q2, with all segments of private demand weak,” Dariusz…