China: GDP moderates for second consecutive period
July 15, 2013
In the second quarter, GDP grew 7.5% over the same period last year, which was below the 7.7% rise observed in the first quarter. Moreover, the figure was in line with market expectations and marks the lowest reading in the last three quarters.
Although the National Bureau of Statistics does not provide a breakdown of GDP by expenditure, additional data suggest that investment has lost momentum in the second quarter, while private consumption continued to support growth. Retail sales expanded a nominal 13.0% in the second quarter, which is above the 12.4% rise observed in the first quarter. Conversely, urban fixed-asset investment growth, which includes capital and construction investment, expanded an accumulated 20.1% in nominal terms in the first half of the year, down from the accumulated 20.9% rise seen in the first quarter. Both exports and imports increased at a slower pace than in the previous quarter.
The industrial sector decelerated in the first six months of the year, expanding 7.6% (Q1: +7.8% year-on-year), while the primary sector also moderated (Q1: +3.4% yoy; H1: +3.0% yoy). Growth in services remained steady at 8.3%.
A quarter-on-quarter analysis does not corroborate the deceleration suggested by annual figures, as GDP rose a seasonally adjusted 1.7% in the second quarter, slightly above the 1.6% expansion recorded in the first quarter.
In an unscripted comment on 11 July, Finance Minister Lou Jiwei stated that the expected GDP growth target for this year was 7.0%. The remark generated confusion about the possibility that China's authorities may have revised down the 7.5% annual growth target set in March. Chinese state media quickly corrected Lou Jiwei's comment, confirming that the official growth target is 7.5%, not 7.0%. The growth outlook for China deteriorated again this month, continuing on the downward trend that has been observed since May. FocusEconomics Consensus Forecast panellists slashed their 2013 GDP growth forecast by 0.1 percentage points over the last month to 7.6%. In 2014, the panel sees economic growth remaining at 7.6%.