China: Exports support output as property drags – DBS
DBS Group Research forecasts an improvement in China’s industrial production to 5.0% year-on-year in August, helped by strong export growth driven by AI-related electronics.
DBS Group Research anticipates China's industrial production to increase to 5.0% year-on-year in August, propelled by robust export growth fueled by artificial intelligence-related electronics. Nevertheless, Taimur Baig and Chang Wei Liang foresee retail sales remaining restrained and anticipate further decline in fixed asset investment due to the property slump and tendency towards completed-home sales.
Industrial production is projected to rise from 4.5% yoy in July to 5.0% in August, driven by strong exports. Export growth increased from 23.9% yoy in July to 25.0% in August, underpinned by high demand for AI-related electronics. However, domestically, retail sales growth is forecasted to stay modest at 0.4% in August, partly attributed to a higher base from last year's trade-in subsidy programs.
In terms of investment, fixed asset investment is expected to worsen from -6.7% yoy ytd in July to -7.0% yoy ytd in August. China's transition from presales to completed-home sales is expected to negatively impact near-term investment, land acquisitions, and project starts, especially among heavily indebted private developers.
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