Chinese economic growth likely to slow moderately, to ease to 6.3 pct in 2018 – Danske Bank

In 2016-2017, China’s economy bolstered, driven by a robust housing market, strong infrastructure spending and higher export growth pulled by higher activity in the U.S. and Europe. Steel production is also believed to have ramped up in the summer ahead of the anti-pollution curbs on production that are now setting in over the winter, noted Danske Bank. This year, the Chinese economy is expected to grow 6.8 percent after expanding 6.7 percent last year.

However, the economy is expected to slow down moderately. Firstly, China has undertaken many steps to ease the housing market and home sales are now declining. Secondly, a downshift in external demand is expected pushing export growth slightly lower. And finally, anti-pollution curbs are expected to take a toll on construction and heavy industry from November to February, stated Danske Bank.

Over the past year, President Xi Jinping has bolstered his focus on supply-side reform and measures to reduce financial risks. The measures are expected to continue, and in some areas intensify, over the next year, said Danske Bank. Given a change in the nation’s priorities to more sustainability, growth is expected to be lower in years ahead.

“We look for 6.3 percent in 2018, falling to around 6 percent in 2020. In our view, the decline will be felt mainly in infrastructure and construction and by subsuppliers to these sectors. We expect consumption growth to stay robust, though”, added Danske Bank.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was bullish at 75.7161, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -71.702. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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