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China growth decelerates to 4.3% as ING flags policy support
ING says the slowdown is the weakest quarter since late 2022 and points to weak domestic indicators like fixed-asset investment, retail sales, and negative net exports as inflation rises in Q2.
China’s second-quarter GDP growth slowed to 4.3% year-on-year from 5.0% in the first quarter, the weakest pace since late 2022, according to ING’s Chief Economist for Greater China, Lynn Song, as summarized by FXStreet.
While growth averaged 4.7% in the first half and remains within China’s 4.5% to 5.0% full-year target range, Song highlighted increasingly weak domestic indicators. Fixed-asset investment has slipped deeper into negative year-on-year territory, retail sales are barely above zero, and net exports stay negative on a year-on-year basis despite strong headline export growth.
FXStreet also noted that the data provides less support for the GDP deflator, as inflation was higher in the second quarter. That combination has raised expectations that policymakers will step up fiscal and monetary support, although ING said it is uncertain how quickly measures will be announced and rolled out.
ING expects China can still hit the full-year growth target, but it sees the risks to its 4.7% forecast as balanced to the downside. The firm added that without support growth could continue to grind lower, and said the stakes could rise ahead of the upcoming Politburo meeting as the country enters the first year of its 15th Five-Year period.