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Arjen van Dijkhuizen, senior economist at ABN AMRO, points out that China’s real GDP growth in Q3 came in marginally lower than expected, at 6.0% YoY (consensus/ABN AMRO expectation: 6.1%, Q2: 6.2%).

Key Quotes

“This reflects the lowest pace of growth in three decades and is at the bottom of the government’s growth target for 2019 (6.0-6.5%). Quarterly growth fell marginally to 1.5% qoq (Q2: 1.6%). The slowdown was driven by weakness in the industrial sectors.”

“Growth of industry and construction slowed to 5.2% yoy (Q2: 5.6%). This was partially offset by a mild acceleration in services, from 7.0% yoy in Q2 to 7.2% in Q3. The weakness in industry fits within the global picture, as the escalation of the US-China trade/tech conflict has proven a serious drag for worldwide business confidence, manufacturing activity, investment and trade.”

“All in all, these numbers are in line with our base scenario of an ongoing gradual slowdown. We expect annual growth to drop from 6.6% in 2018 to 6.2% in 2019 and for next year we expect growth to slide further and fall below 6%. Our annual growth forecast for 2020 is 5.8%, which is slightly below consensus (but consensus is moving our way).”