BEIJING - China's economy is expected to grow 7.5 percent in the second quarter this year due to obvious signs indicating a pick-up in the economy since May, a report forecast on Wednesday.

The forecast came after economic growth in the world's second largest economy slowed to 7.4 percent in the first quarter, marking the lowest rate of growth in six quarters.

In order to ease the downward pressure, the government has rolled out a raft of measures to ensure stable growth since April, including plans to boost investment in railways and affordable housing projects, tax reductions for small and micro-sized firms, and cuts to reserve requirement ratios for certain banks, said the report, which was released by the International Finance Research Institute under the Bank of China, a major state-owned commercial bank.

The report said that these initiatives have started to take effect in boosting the economy, as reflected by improvements in industrial output, consumption, exports and electric power generation.

Official data showed industrial production expanded at a faster pace in May by rising 8.8 percent year on year, accelerating 0.1 percentage points from the April figure. Retail sales in Jan-May grew 12.1 percent, slightly higher than the 12 percent growth rate in the first four months. Meanwhile, fixed asset investment was generally steady by growing 17.2 percent year on year in the first five months.

The country's statistical authority is scheduled to announce the second-quarter data for gross domestic product (GDP) and others including industrial output, fixed-asset investment, and consumption on July 16.

The report predicted that third-quarter growth will rise to 7.6 percent on expectations of improved external demand, domestic policies to stabilize exports and the depreciation of the yuan, the Chinese currency.

However, challenges remain that may pose risks to the economy, including a cooling real estate market, local government debts and overcapacity, the report noted.

Faced with these challenges, the report forecast the government's fiscal policies will be more active with an eye on boosting the economy as well as pushing forward economic restructuring. It also forecast that monetary policies are not likely to become overly relaxed, though they will become more flexible and targeted.

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