China's GDP slowed to 6% in Q3 2019

The African swine flu outbreak weighed on growth.

China’s GDP growth in 3Q 2019 slowed to 6% YoY from the previous quarter’s 6.2%, as external demand weakened amidst trade tensions with the United States, according to a report by Maybank.

The drags on growth were due to slowdowns within the trade-related industry. The primary industry fell to 2.7% in Q3 YoY from the previous quarter’s 3.3%. The secondary industry on the other hand, also experienced a slip, from 5.6 % in Q2 YoY to 5.2% in Q3. These levels offset the tertiary industry, which is the only area that increased with 7% in Q2 YoY to 7.2% in Q3.

Additional headwind for domestic demand, specifically consumer spending, is putting pressure on inflation with 2.8% YoY in August to September’s 3%. Higher inflation was driven by surging food prices due to outbreaks of the African swine fever in the country, disrupting pork supplies.
The trend is expected to continue until January 2020.

Maybank forecasts that in support of the country’s target to reach a growth of 6%-6.5%, more policy stimulus will be put in place to support domestic demand.

China’s Composite purchasing manager’s index (PMI) is improving since July 2019, suggesting that fiscal and monetary stimulus measures implemented since mid-2018 are beginning to take effect.