China: Further slowdown in growth – Standard Chartered

Sandeep Kanihama FXStreet Contributor

Standard Chartered analysts notes that China’s growth slowed across the board in August, failing market expectations of a recovery after a disappointing July.

Key Quotes

“Industrial production (IP) growth decelerated further to 4.4% y/y in August, averaging only 4.6% in the first two months of Q3, down from 5.6% in Q2.”

“Fixed asset investment (FAI) growth slowed to 3.3% y/y in real terms in August, from 3.9% in July and 3.8% in Q2, due to falling manufacturing investment (down 1.6% y/y in August in nominal terms versus 4.7% growth in July).”

“PPI deflation deepened to 0.8% y/y in August. Falling PPI has seen industrial profits decline 1.7% y/y from January-July, compared to a 17% increase during the same period last year.”

“We expect China’s GDP growth to moderate to 6.1% y/y in Q3, from 6.4% in Q1 and 6.2% in Q2.”

“We maintain our forecast that the People’s Bank of China (PBoC) will cut the required reserve ratio (RRR) by another 50bps or inject liquidity via the medium-term lending facility (MLF) before end-2019. We also expect the PBoC to cut the MLF rate twice by 10bps each in the rest of 2019, with the first cut as early as September and again in Q4.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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