Display mode (Doesn't show in master page preview)

19 Oct 2018

International Economy

Chinese Economy Slowed in 3Q18 Despite Accelerated Exports and Easing Monetary Policy…Watch Out for Challenges that May Further Hurt Growth in 2019 (Business Brief No.3767)

คะแนนเฉลี่ย

       ​China's economic growth slipped to 6.5 percent YoY in 3Q18, representing a record low since 2009. The decelerated growth was attributable to steady drop in its industrial production amid the country's trade dispute, which is expected to escalate ahead, plus persistent sluggishness seen in household consumption from 2Q18. However, exports overall grew 11.2 percent YoY, sustained by accelerated industrial production since 2Q18. China's increased shipments to the US also helped support its 3Q18 economic performance.   

          Looking into the remainder of 2018, China's 4Q18 GDP growth may slow down further from 3Q18 due to the intensified impacts of the US trade protectionism and gloomy signs seen in China's manufacturing sector as evidenced by its PMI that continues to decline. However, real sector of the economy may partially be supported by public investment and a new stimulus package for domestic consumption. As a result, China may report an economic growth of at least 6.2 percent in 4Q18, thus bringing its 2018 GDP growth to 6.6 percent.

          Meanwhile, China's liquidity injection in the financial system amid rising inflation and the fact that the Yuan may lean toward CNY7/USD, being a psychologically important resistance level, could further hinder the implementation of China's accommodative monetary policy in the future.   

          An issue that must be monitored closely is China's economic development in 2019 vis-à-vis the US trade protectionism that could become more intense. As China may face more challenges in implementing its monetary policy, we at KResearch expect that the Chinese economy may grow in a range of 6.0-6.4 percent for 2019. Moreover, lightened liquidity in China's financial system may cause corporate debt problem to resurface and this will be a policy challenge for the government later on. 

International Economy