January 21, 2019

Chart of the Week: China’s official GDP data point to weakest quarterly growth since the financial crisis

by Fathom Consulting.

In recent months, China has rarely been out of the headlines, but its struggles started far earlier, with our measure of China’s economic activity (the CMI) suggesting growth first started to slow towards the end of 2017. Having since doubled down on its old growth model, throwing in the towel on its half-hearted attempt to rebalance in 2015–16, China’s policymakers have managed to cushion the economic downturn. Nevertheless, today’s release of official GDP data suggests that China’s economy grew at 6.4% in the year to 2018 Q4 — its slowest annual pace since the financial crisis. That figure coincides with the latest reading from the CMI, which suggests that the economy grew by 6.4% in the twelve months to November. For 2018 as a whole, official growth was 6.6%, its weakest since 1990. Problematically for Beijing, efforts to stimulate the economy will only exacerbate existing domestic and global imbalances, both of which are already taking their toll. Indeed, recent trade data suggest that the tariffs imposed on China’s exports to the US are starting to pinch. Looking ahead, we expect growth to slow further from here.

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