China | Growth deceleration appears manageable

Summary

The Q2 GDP growth came at 6.2% y/y (versus 6.4% y/y in Q1), in line with market consensus. Growth slowdown in Q2 is widely expected amid the unsettled trade war with the US and the domestic structural obstacles such as debt overhang and financial risks.

Key points

• Key points:
• The Q2 GDP growth came at 6.2% y/y (versus 6.4% y/y in Q1), in line with market consensus.
• Growth slowdown in Q2 is widely expected amid the unsettled trade war with the US and the domestic structural obstacles such as debt overhang and financial risks.
• For the positive side, the outturn proved the resilience of China’s economy even in the face of escalating trade tensions with the US.
• Looking ahead, the growth outlook in 2H 2019 depends on the authorities’ policy stance. We anticipate more monetary and fiscal easing measures to be deployed to sustain growth momentum.
• The drag of Q2 GDP is mainly from April and May while June economic indicators widely better than market expectations.

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