China’s GDP growth receded to 6.2% yoy in Q2

As published this morning, China’s GDP growth receded to 6.2% yoy in the second quarter. This number waswidely expected by market forecasts (Reuters, Bloomberg) and thus no surprise. However, it marked the weakest level in 27 years, even falling slightly below the trough of the Great Financial Crisis in Q1 2009 (6.4% yoy).

Highlights:

  • As widely expected, China’s Q2 GDP slowed to 6.2% yoy, after 6.4% yoy in Q1. This marked the weakest level in 27 years.
  • By contrast, monthly real activity data like industrial production (IP), urban investments and retail sales surprised on the upside.
  • Given the weak signals from recent PMIs, we are cautious that monthly data already signal a turn-around. That said, monetary as well as fiscal policy measures are markedly supporting the economy.
  • Overall, in the light of the bumpy re-opening of the US-China trade talks and a lifting of tariffs not in sight, we still see the Chinese economy to tend to soften in Q3 before possibly stabilizing in Q4. In case of a stronger slowdown, the government would not hesitate to resort to more policy support.
  • Stock markets in China responded slightly positively overall, turning around from a soft start.

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CHINA’S GDP GROWTH RECEDED TO 6.2% YOY
IN Q2

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