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Economic News

China: Modest Real GDP Growth in the Third Quarter

October 18, 2024
Marc-Antoine Dumont
Senior Economist

Highlights

  • Chinese real GDP growth came in at 0.9% (non‑annualized) in the third quarter of 2024, following a 0.5% rise in the previous quarter. Year‑over‑year real GDP growth was 4.3% for the third quarter.
  • Inflation decelerated once again, going from 0.6% in August to 0.4% in September. Core inflation, excluding food and energy, also slowed, posting gains of just 0.1% last month.
  • Industrial production is up 5.4% from September 2023. Year‑over‑year growth in retail sales picked up, going from 2.2% in August to 3.3% in September.

Comments

While growth did accelerate in the third quarter, China's real GDP growth for the year is still rather lacklustre. There's no guarantee that it will reach the government's 5.0% target, especially since carryover growth is just 4.3%. But Chinese authorities are holding out hope that the target can be reached through further stimulus measures. However, there's no silver bullet for China's property market, which has been in a slump for several years now. It will take time for the situation to normalize.

 

China can still find some comfort in the results for industrial production and retail sales, both of which accelerated in September. These two indicators have been decelerating since May, as the slowdown affecting the property market became more generalized. But one month of stronger gains doesn't make a trend, and these indicators will bear watching in the months ahead.

 

China seems to have distanced itself from its deflation struggles, and there has been no widespread price decline since January 2024. That being said, some components did continue to slip in September. Food, for example, fell 1.0%. Core inflation is also sluggish (0.1%) and will need to be watched.

Implications

Chinese real GDP growth remains modest, despite some acceleration in the third quarter. The country's economic problems are deeply rooted, and the stimulus measures announced so far have not had the desired effect. Against this backdrop, real GDP is expected to grow 4.8% this year and 4.1% in 2025.

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