China: Coronavirus following its course – Nordea

As the spread of the coronavirus is slowing in China, domestic activities are gradually being resumed. The development is in line with the expectations of economists at Nordea. USD/CNY trades at 7.015.

Key quotes

“We keep our forecast for Chinese GDP growth in 2020 at 5%, versus our pre-coronavirus estimate of 5.9%.” 

“On a quarterly basis, we expect the economy to be hit the hardest in Q1, with growth at a modest 2.8% y/y, followed by a recovery in Q2 and Q3.”

“The risks are tilted to the downside. The service sector, which accounts for more than 50% of GDP, has seen a slower restart than the manufacturing sector. That could offset some of the production recovery.”