China: Growth slows to 6% in Q3 – ABN AMRO

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).”