China: Economic recovery stays well in place – UOB

Ho Woei Chen, CFA, Economist at UOB Group, assesses the latest GDP figures in China for the July-September period.

Key Quotes

“China’s GDP growth accelerated to 4.9% y/y in 3Q20 (2Q20: 3.2% y/y), in line with our forecast… The recovery was broadbased across the three key industries. However, tertiary industry recovery continued to lag expectation while the secondary industry stood out with growth at the fastest pace since 1Q19.”

“The economic data for September showed recovery gaining further traction. As such, we expect the GDP growth to normalise to its potential level in 4Q20. We now factor in a stronger GDP growth in 4Q20 at 6.2% y/y compared to our previous forecast of 5.7% with our full-year 2020 GDP growth marginally higher at 1.9% compared to 1.8% previously.”

“Although the outlook for domestic demand has improved, we still see external risks arising from the US-China trade conflicts, the November US presidential election and the worsening pandemic outbreak in parts of Europe and the US.”