GDP grows at softest pace since Q1 2023 in Q3

GDP reading: GDP growth moderated to 4.6% year on year in the third quarter from 4.7% in the second quarter, marking the softest growth since Q1 2023; slowdowns in industry and agriculture more than offset a stronger services sector. That said, the GDP reading was marginally above market expectations. On a seasonally-adjusted quarter-on-quarter basis, economic growth accelerated to 0.9% in Q3, compared to the previous period's 0.5% expansion.

Drivers: The services sector grew 4.8% annually in the third quarter, picking up from the second quarter’s 4.2% increase. Meanwhile, the industrial sector lost steam, growing 4.6% in Q3 (Q2: +5.6% yoy). Agricultural sector growth fell to 3.2% in Q3, marking the worst result since Q1 2020 (Q2: +3.6% yoy). Looking at monthly data, following disappointing figures for multiple indicators in July and August, September data improved: Retail sales, industrial production and fixed investment growth all beat market expectations in the month.

Stimulus to underpin activity: The announcement of significant stimulus measures in recent weeks – including cuts to multiple policy rates and extra fiscal spending—should support the economy in Q4 and into 2025.

Panelist insight: On the impact of stimulus, EIU analysts said: “Although the lift to the economy will not be felt immediately, its near-term impact on confidence and long-run influence on macroeconomic stability are positive. We now forecast that China’s economic growth will reach 4.8% in 2024 (from 4.7% previously), primarily helped by the front loading of Rmb200bn investments in strategic projects recently announced by the National Development and Reform Commission. The economy will then expand by 4.8-4.9% in 2025, as more stimulus kicks in.” Nomura analysts were slightly more downbeat: “We maintain our cautious GDP growth forecast of 4.4% y-o-y for Q4 2024 and 4.0% for 2025, but to reflect the higher-than-expected Q3 GDP print, we raised our 2024 annual GDP growth forecast to 4.7% from 4.6%. Despite seemingly less pressure to meet the official growth target, we believe Beijing will still be compelled to introduce a package of fiscal stimulus measures, which could be capped at 3% of GDP, due to the huge fiscal revenue gap and the downward spiral in the property sector.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Chinese GDP projections for the next ten years from a panel of 61 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Chinese GDP.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Chinese GDP projections.

Want to get access to the full dataset of Chinese GDP forecasts? Send an email to info@focus-economics.com.