China: Growth momentum is worse than headline figure – ANZ
|Economists at the Australia and New Zealand Bank (ANZ) offered their take on Friday's release of the Chinese GDP report, which showed that economic growth eased further to a near 30-year low level of 6.0% during the third quarter of 2019 and marked a further loss of momentum.
Key Quotes:
With China’s GDP having expanded 6.2% on a year-to-date basis in Q3, we believe it is likely that the economy will maintain full-year growth at 6.0% in 2019 unless GDP growth falls below 5.5% y/y (or 1.0% q/q) in Q4.
In nominal terms, China’s GDP growth has retreated to 7.6% y/y in Q3 from 8.3% in Q2, signalling that the economy is slowing at a quicker pace than what the headline figure indicates.
We also notice that China’s industrial production (IP) data tend to rise at quarter-ends in 2019. For instance, the headline growth rates rose 1.4ppt in September, and 1.3ppt in June.
The increase in retail sales in September does not point to a broad-based recovery in consumption.
To further support economic growth, fiscal policy is the only viable tool. However, Chinese policymakers will also need to address existing funding constraints faced by local governments.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.