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CNY: Modest slowdown in economic growth of China - MUFG

FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, notes that the latest GDP report from China revealed that the economic slowdown has been more modest than feared.

Key Quotes

“An easing of heightened concerns over slowing economic growth in China and of renminbi devaluation expectations is helping to support commodity and emerging market currencies in the near-term. Still, we remain sceptical over the sustainability of recent gains which have been impressive.”

“The latest GDP report from China revealed that economic growth slowed to an annual rate of 6.9% in Q3 from 7.0% in Q2. Resilient growth in the service sector which shrugged off the sharp decline in the Chinese equity market resulted in the economy slowing more modestly than expected in Q3.”

“Still it was the slowest growth rate since Q1 2009. Services output expanded by an annual rate of 8.6% in Q3 up from 8.5% in Q2. The annual rate of retail sales growth accelerated for the second consecutive month increasing by 10.9% in September. In contrast, industrial output slowed further to an annual rate of 5.8% in Q3 from 6.0% in Q2. Fixed asset investment growth slowed more than expected as well to an annual rate of 10.3% in the first nine months of this year, the slowest since 2000.”

“The report highlights the diverging performance of China’s economy. Economic growth still appears on course to meet the government’s target of around 7.0% for this year. However, investors will remain sceptical that the official figures may understate the slowdown in growth.”

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