China: Another dip in the GDP growth – Nordea Markets

Amy Yuan Zhuang, analyst at Nordea Markets, explains that the Chinese growth is at a decade-low due to the trade dispute with the US as Q4 GDP growth fell to 6.4% y/y from 6.5% in Q3. 

Key Quotes

“This is in line with consensus expectation and better than our forecast of 6.2%. China has not seen its quarterly GDP growth rate this low since Q1 2009, when the Lehman crisis brought a shock to the global economy. The full-year growth for 2018 was thus 6.6%, the lowest since 1990.”

“The monthly data released simultaneously with the GDP figures have either improved or stayed unchanged in December. Retail sales grew by 8.2% y/y, industrial production by 5.7% and fixed assets investments by 5.9%. However, this does not change the grim picture painted by some other indicators. Exports plunged in December. The PMI surveys for manufacturing dropped to below 50 for the first time in more than two years.”

“Although we expect uncertainty from the trade war will continue dragging down growth this year, we think the increased monetary and fiscal stimulus will prevent a disorderly slowdown in China. A soft landing is the most likely scenario.”