China: Strong growth indicates the V-shape recovery continues – BBVA

The Chinese economy has continued the V-shape recovery due to its "first-in, first-out" of the Covid-19 pandemic, with Q3 GDP picked up significantly to 4.9% y/y from 3.2% y/y during the second quarter, explained analysts at the BBVA Research Department. They add that the uneven feature of recovery that the demand side lags behind the supply side is significantly mitigating.

Key Quotes: 

“The economic recovery gives the authorities more confidence to continue to normalize monetary and fiscal policies in the rest of the year.”

“The strong Q3 GDP growth at 4.9% y/y indicates the V-shape recovery continues in China. Due to China’s “first-in, first-out” of Covid-19, Chinese economic growth will be the only positive growth rate among the main economies this year, the only silver lining amid the global recession.”

“The uneven recovery feature that the supply side lags behind the demand side has been mitigating in Q3 as the economy further normalizes. On the other hand, the exports have shown a strong resilience, supported by the pandemic-related shipments; however, we need to be cautiously positive on its sustainability.”

“Chinese authorities are trying to normalize the previous monetary and fiscal measures in 2H 2020 amid better-than-expected growth recovery.”