China GDP growth forecast dips to 7.5%

But a pickup in momentum is anticipated in 4Q12.

According to Barclays, its GDP growth forecasts were revised downwards to 7.5% (from 7.9%) in 2012 and to 7.6% (from 8.4%) in 2013. August activity data confirm our view of a weakening economy in Q3.

Here's more from Barclays:

While our base case remains that the government is likely to announce more supportive measures to prevent growth from sliding further, the ongoing industry destocking, weak external demand and mild policy responses suggest that, at best, we are probably going to see growth stabilisation rather than a recovery in H2 12.

Our latest GDP forecasts expect some pickup in q/q momentum in Q4 12 and a modest recovery in y/y growth in 2013. Policy uncertainties should be cleared up somewhat after the 18th Chinese Communist Party Congress, which is likely to be held in mid- to late October.

Despite some recovery in momentum, y/y growth is likely to slow further from Q2's 7.6% to 7.3% in Q3 (as also suggested by slowing industrial production growth) before some stabilisation in Q4 at 7.2%y/y. We look for a steady pickup in y/y growth to 7.8% in the second half of next year. It should be noted that China's potential growth has likely come down to 7-8%, and the next government appears to be focusing more on rebalancing the economy.