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China Q2 GDP: A semblance of stability – Westpac

Elliot Clarke, Research Analyst at Westpac, explains that despite challenging circumstances, China’s economy continues to grow at a robust pace, benefitting the nation broadly, but particularly households.

Key Quotes

“Annual growth was in line with the market’s expectation at 6.7%. In keeping with the ‘quality growth’ focus (which, in large part, is about improving consumers living standards), consumption was the key support for growth. In year-to-date terms, consumption added 5.3ppts to annual growth at June.”

“There was nothing particularly out of place in the other GDP detail. Nominal GDP growth slowed more sharply, but this was from a higher starting point than the constant price series – 10.2%yr to 9.8%yr.”

“Using first half growth as a benchmark for 2018 overall, an average of 1.6% equates to 6.4% annualised, a tick below authorities’ target of 6.5% for 2018. On the partial data to hand, an acceleration in the second half seems highly unlikely. Hence the risks to the authorities’ target are skewed downward.”

“We remain comfortable with our sub-consensus 6.3% forecast for 2018.”

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