China: Weaker growth calls for fiscal stimulus – Nomura

By FXStreet FXStreet (Bali) – Following the disappointing Chinese data over the weekend, Nomura Asia Economics Team, expects policy to remain accommodative in H2, with fiscal stimulus playing a larger role in bolstering growth.

Key Quotes

“Industrial production growth edged up to 6.1% y-o-y in August from 6.0% in July due to a low base last year (Consensus: 6.5%; Nomura: 6.2%).”

“Fixed asset investment growth slowed more than expected to 10.9% y-o-y (ytd) from 11.2% in July (Consensus and Nomura: 11.2%).”

“The bright spot is that nominal retail sales growth rose to 10.8% y-o-y from 10.5% (Consensus and Nomura: 10.6%), partly helped by better property sales and higher inflation.”

“Monthly activity data suggests that growth has yet to stabilise in August, while we also see some progress in economic rebalancing.”

“We maintain our Q3 GDP growth forecast of 6.9% y-o-y but acknowledge that downside risk exists due to weak property investment and some possible retreat of the extra contribution to growth from the financial sector.”

“We expect policy to remain accommodative in H2, with fiscal stimulus playing a larger role in bolstering growth.”
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Source:: FX Street