China's Q3 nominal GDP likely to decline in y/y rate

The NBS estimated that China grew at a real rate of 7.0% over the year to Q2, up 1.8% seasonally adjusted vs Q1. Q3 is forecasted to have a 0.2ppt decline in the y/y rate, with risk in both directions but skewed to the upside. 

"Nominal GDP will fall much more sharply, by 1.1ppts, as it tends to be more sensitive to swings in underlying demand conditions than the real estimate, and the upstream deflationary impulse deepened in the quarter", says Westpac.

Net exports were a major swing factor in the move from 2014 to 2015. They have since stabilised, with a wider nominal goods surplus exaggerated by steep price declines in imports, while the services deficit is a major drag. The Q2/Q3 swing will be minimal.

The tertiary sector's contribution will be of significant interest given that the large impact of finance in Q2 was clearly not sustained in Q3.