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World Economy

OPEC Monthly Oil Market Report – August 2017

23

Graph 3 - 20: Indian PMIs

Graph 3 - 21: Indian industrial breakdown

China

Chinese GDP

grew by 6.9% in 2Q17, which was more than expected, as exports gained pace. Domestic

demand remained solid, although the growth of both household consumption and fixed asset investment

eased somewhat. Real estate activity surprised on the upside, with housing sales growth accelerating to

18.4% y-o-y in June and housing starts growth accelerated to 14.4%. The resilience in the housing market so

far this year has been driven by strong activity in the country’s smaller cities where housing policies have

remained very accommodative. Following the stronger than expected GDP growth in 2Q17 and with real

estate activity in the smaller cities remaining flexible, a more modest slowdown is now expected in 2H17.

Graph 3 - 22: Chinese GDP growth

Graph 3 - 23: Chinese GDP breakdown

China will continue “seeking progress while maintaining stability” for its economic work in the 2H17,

according to the government. China will also continue to implement a pro-active fiscal policy and prudent

monetary policy in the 2H17. Authorities will push forward supply side reforms and financial system

deleveraging. Efforts to stabilise the property market and curb local government debt growth will also be

encouraged. But it seems the momentum in overall real estate activity will slow in the 2H17 owing to a less

accommodative monetary policy stance and spill-over effects on sentiment from the deceleration in housing

activity in large cities. Strong growth in the 1H17 has emboldened policymakers to tighten the overall macro

stance. Policymakers have controlled higher market interest rates and taken measures to tighten regulation

on shadow banking and local government financing. They have also tightened housing purchasing

restrictions in many large cities to stem fast gains in prices. However, overall, the tightening of the macro

stance is gradual and moderate. The Chinese government has targeted average GDP growth of at least

6.5% in 2017-20 to achieve their objective set in 2010 to double GDP and per capita income by 2020. But

46.0

45.9

47.9

44

46

48

50

52

54

56

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Index

Composite

Services business activity

Manufacturing

Sources: Nikkei, IHS Markit and Haver Analytics.

-30

-15

0

15

May 16

Jun 16

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Total IP Manufacturing IP Food products IP

Sources: Central Statistical Organisation of India and

Haver Analytics.

% change y-o-y

6.96.9

7.3

6.9

6.7

6.0

6.4

6.8

7.2

7.6

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

2014

2015

2016 2017

Sources: China's National Bureau of Statistics and

Haver Analytics.

% change y-o-y

4.4

2.3

0.3

-2

0

2

4

6

8

10

1Q 14

2Q 14

3Q 14

4Q 14

1Q 15

2Q 15

3Q 15

4Q 15

1Q 16

2Q 16

3Q 16

4Q 16

1Q 17

2Q 17

Net exports of goods and services

Gross capital formation

Final consumption expenditure

Sources: China National Bureau of Statistics and

Haver Analytics.

% change y-o-y