Q3 GDP data shows sluggish growth, but early signs of stabilization
Unsurprisingly, China’s economy saw sluggish growth in Q3 2024.
Per data released by the stats bureau (NBS) on Friday:
- Real GDP grew by 4.6% y/y in Q3, down from 4.7% the previous quarter.
- On a quarter-on-quarter basis, real GDP grew 0.9%, up from 0.5% in Q2, but still way below historical trends – as pre-pandemic q/q growth averaged 1.4%.
Notably, real growth in China’s secondary industry – encompassing industrial upgrading and high-tech manufacturing – slowed to 4.6% y/y, down from 5.6% in Q2.
- On a nominal basis, China’s secondary industry only grew 3.0% y/y.
ICYDK: China’s manufacturing industry has been hammered by deflation, with factory gate prices falling for 24 consecutive months.
That's a big reason why overall nominal GDP grew by just 4.0% y/y.
- This is the sixth consecutive quarter that nominal growth has lagged real growth, symptomatic of deeply embedded deflationary pressures.
Growth in household income and expenditure also slowed in Q3.
- Real disposable incomes grew by 4.1% y/y, down from 4.2% in Q2.
- Consumption expenditure grew by 2.7% y/y, down from 4.9% in Q2.
That said, amidst the broadly negative data, there were some more positive aspects:
- Household propensity to consume in the first nine months of the year was 66.7%, the highest rate since 2019.
- Meanwhile, monthly indicators for September suggest the economy may be starting to stabilize.
Get smart: GDP data is backward looking, and today’s print affirms what we already knew – China’s economy has performed disastrously over the past few months.
- However, the economy will be able to limp towards its annual growth target of “around 5%,” buoyed by the upcoming fiscal stimulus, and tentative signs of a property market stabilization.