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Chinese economic growth likely to slow down further in 2019 and 2020 – Wells Fargo

The Chinese economic growth data for the third quarter is set to be released tomorrow. The third quarter has seen some considerable developments as the trade war between China and the U.S. has continued to ramp up. Even if most of the recent round of tariffs on USD 200 billion of Chinese exports to the U.S. only took effect towards the end of the quarter, other tariffs such as those on steel, aluminium and another USD 50 billion in Chinese goods were in effect for most of the third quarter, noted Wells Fargo in a research report.

Policymakers in China have reacted with measures to help boost growth, with the most recent move being a cut of 100 basis points in the reverse requirement ratio earlier in the week, which should help inject liquidity into the financial system and push down interbank interest rates.

“We do not expect the recently enacted tariffs to completely derail the Chinese economy. We do expect economic growth to slow, however, from 6.6% this year to 6.3% in 2019 and 6.1% in 2020”, stated Wells Fargo.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Chinese Yuan was bearish at -90.8447, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at 116.917. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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