China: Q2 GDP surprised to the upside – UOB

UOB Group’s Head of Research Suan Teck Kin, CFA, and Economist Ho Woei Chen, CFA, gave their views on the latest GDP figures in China.

Key Quotes

“China’s economy returns to growth in 2Q20 at stronger-than-expected 3.2% y/y… from an unprecedented contraction of -6.8% y/y in 1Q20. The recovery was seen across the three key industries: primary (+3.3%), secondary (+4.7%) and tertiary (+1.9%). On the seasonally-adjusted basis, GDP rebounded sharply by 11.5%q/q from -10.0% in 1Q20.”

“While 2Q20 growth recovery was mainly supported by the resumption in domestic production and consumption, we expect this to broaden out in the second half of the year on the back of a recovery in global demand as the major economies such as the US and EU begin their reopening from the COVID-19 pandemic. We maintain our forecast for China’s full-year GDP at 1.8% with 3Q20 growth likely to accelerate to 4.9% y/y and around 5.7% in 4Q20. The key risks remain centered on the pandemic recovery globally, US-China relations as well as the impact from floods in China.”