China: August data confirms weaker Q3 – Standard Chartered

Analysts at Standard Chartered suggest that China’s economy managed to hold up in August as industrial production (IP) growth was in line with market expectations, up marginally in August to 6.1% from 6.0% in July – partly due to a favourable base effect.

Key Quotes

“After accelerating temporarily in April and May, the industrial sector appears to have stabilised at around 6.0% growth.”

“However, we think growth in China is likely to ease in the coming months, reflecting trade pressures and slowing housing-market growth.”

“We forecast Q3- and Q4-2018 GDP growth at 6.5% and 6.4% y/y, respectively, versus average 6.8% y/y in H1.”

“China’s government has clearly shifted its policy priority to stabilising growth from deleveraging amid escalating tensions with the US.”

“We see the policy shift as a signal that the government will make a concerted effort to achieve its 6.5% growth target for 2018.”

“Meanwhile, the People’s Bank of China (PBoC) has removed its tightening monetary policy bias, providing ample liquidity in the interbank market.”


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