China: Weaker economic growth and a more uncertain outlook - NAB

Gerard Burg, Senior Economist at NAB, notes that China’s economic growth slowed further in Q3 2018 – down to 6.5% yoy – the weakest rate of growth since March 2009 (the trough of the Global Financial Crisis).

Key Quotes

“The key driver of this downturn was China’s industrial sector, which grew at its slowest pace on record, amid the impact of deleveraging, the anti-pollution drive and trade tensions with the United States.”

“Our forecasts are unchanged – at 6.6% in 2018, 6.25% in 2019 and 6.0% in 2020 – however there are greater downside risks to this outlook.”

“Growth in China’s industrial production was slower in September – increasing by 5.8% yoy.”

“There was an acceleration in real fixed asset investment growth – up by 3.3% yoy (from 0.9% previously).”

“China’s trade surplus was a little wider in September, at US$31.7 billion, compared with US$26.7 billion previously. The impact of US tariffs is yet to emerge in the outbound trade data – with exports rising by 14% yoy. In contrast, China’s imports from the US fell by 1.2% yoy – potentially reflecting the impact of China’s retaliatory tariffs. As a result, China’s trade surplus with the United States has continued to expand – totalling US$307 billion in the twelve months to September (a new record high).”

“In real terms, retail sales growth slowed marginally – to 6.4% yoy (from 6.5% previously) – the slowest rate of growth since May 2003.”