Gerard Burg, senior economist at NAB, points out that Chinese economic growth continued to slow in Q4 and was down to 6.4% yoy (compared with 6.5% in Q3), equalling the slowest rate of growth (along with Q1 2009 – the trough of the GFC in China) since 1990.
Key Quotes
“We argue that China’s deleveraging program was the key factor in weaker economic conditions in 2018 and that this is likely to continue this year. Our outlook for China remains unchanged – we see growth at 6.25% in 2019 – the mid-point of a rumoured growth target of 6.0%-6.5% – before slowing to 6.0% in 2020. Trade tensions and softening economic conditions in Europe present some downside risk to the forecasts.”
“Growth in industrial production was marginally stronger in December – at 5.7% yoy (compared with 5.4% in November) – albeit it remained weak by historical standards.”
“In month-on-month terms, there was a sharp slowdown in Chinese imports in December, compared with a modest decline in exports. As a result, China’s trade surplus expanded significantly, out to US$57.1 billion – the largest value since January 2016.”
“Real retail sales accelerated in December – back to 6.7% yoy (from 5.8% previously). That said, this rate of growth remains historically weak – real sales grew by an average of 9.0% in 2017.”
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