China’s economy grew at an annual pace of 6.8% in the first quarter compared to the same period last year. However, an Analyst at Swissquote has shared three reasons why China’s economy will slow down. What are they? This article, China GDP Growth Rate Overview will reveal them.
17 April, Swissquote – The world’s second-largest economy grew at the steady pace of 6.8%y/y in the first quarter of 2018, in line with estimates, and making it the third-straight quarter of 6.8% expansion.
Industrial production came in slightly on the soft side in March, printing at 6.0%y/y versus 6.3% expected, while retail sales beat expectation, rising 10.1%y/y versus 9.7% median forecast.
China GDP Growth Rate Overview
As usual, China displays solid growth figures and this despite a gentle overall slowdown. Indeed, only a year ago industrial production was growing at an annual pace of 7.6%, while retail sales rose 10.9%y/y. However, one has to keep in mind that Beijing is trying to deleverage its economy and deleveraging inevitably leads to slower growth.
Fixed asset investment rose 7.5% in the March quarter, 40bps lower than expected by market participants. State fixed assets investment fell to 7.1%y/y in March, down from 9.1% in February and 10.1% in January, while private investment has been surging continuously since mid-2016, which confirm that the government is working actively at normalizing its economy.
3 Reasons China’s Economy Will Slow Down
We wouldn’t say that the outlook is not rosy for China but this year will be more challenging. First, the deleveraging effort will continue. Second, the real estate market, which was historically one of the biggest growth drivers, will continue to slow down.
Thirdly, the normalization that is underway – i.e., shifting toward a domestic generated growth from an export-driven one – will also affect growth to the downside. However, Chinese institutions will work side by side to soften the negative impacts. Therefore, and in spite of this slightly less bright outlook, we remain confident that China will remain the main growth driver.
This article China GDP Growth Rate Overview: 3 Reasons China’s Economy Will Slow Down was written by Arnaud Masset, an analyst at Swissquote. While every effort has been made to ensure that the data quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein.
This document does not constitute a recommendation to sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or any other kind of investments.