Strong export performance helped to avert a sharp fall in Q3 GDP

Summary

China’s third quarter GDP growth came out at 7.3% y/y, slightly down from 7.5% y/y in the previous quarter while above market expectations (BBVA: 7.0% y/y versus Bloomberg Consensus: 7.2% y/y). In sequential terms, Q3 GDP expanded at a pace of 1.9% q/q sa, decreasing from 2.0% q/q sa in Q2. The downtrend of the economy is mainly due to the persistently sluggish property market as well as its adverse spill-over effects to other related sectors, as evidenced by the significant dip of August industrial production. Nevertheless, a surprisingly strong performance in the export sector helped to avert a sharp fall in Q3 GDP. In the meantime, the authorities reported a number of activity indicators including industrial production, fixed asset investment and retail sales in September, consistent with a moderating trend in the economy. Given the better-than-expected outturns in Q3, we slightly revise our Q4 GDP projection up to 7.2% y/y from 7.0% y/y. As a consequence, our full-year projection of 2014 rises to 7.3% from 7.2% previously.

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