China: Q3 GDP growth likely slowed to 4.4% y/y

The manufacturing PMI edged up to 49.8 in September, while average reading stayed below 50 in Q3. Net exports likely remained a key growth contributor in Q3; real activity growth may have slowed. We lower our Q3 GDP growth forecast to 4.4% y/y (4.9% prior) due to subdued domestic demand. We raise our Q4 GDP growth forecast to 4.8% y/y (4.4% prior) to reflect recent policy support steps, Standard Chartered’s analysts Hunter Chan and Shuang Ding note.

Prompt policy response following weak Q3 performance

“China’s official manufacturing PMI edged up to 49.8 in September from 49.1 in August, exceeding market expectations, as production activity recovered on improved new orders. Meanwhile, the average manufacturing PMI fell 0.4pts to 49.4, staying below 50 for a sixth straight quarter. Industrial production (IP) may have accelerated due to seasonal factors, normalising from the weather impact.”

“Domestic demand weakened in September; the services PMI fell to 49.9 – below 50 for the first time since end-2023. The average services PMI for Q3 eased to 50, indicating a stalled performance, resulting in continued deflationary pressure. CPI inflation may have eased in September on slower growth in food prices and a decline in services and fuel prices. In addition, PPI deflation may have reached its deepest level in five months at 2.5% y/y in September.”

“The goods trade surplus likely widened in Q3, continuing to contribute to growth and partly offsetting the drag from China’s prolonged housing market downturn. Real GDP q/q growth likely stayed below 1% in Q3. The September Politburo meeting showed a more growth-supportive policy stance and the People’s Bank of China (PBoC) hinted at more dovish monetary policy. We maintain our 2024 GDP growth forecast at 4.8%, with risk to the upside if outsized fiscal measures are announced. The government may issue additional bonds to meet its budgeted fiscal spending, and expand the use of special bonds for destocking housing inventory and mitigating debt risks.”

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.