The Day at a Glance | October 18 2021

The Top

*China slows down more than expected in the 3Q21.

*Biden is willing to negotiate the duration of the programs proposed in his economic plan in order for Congress to approve it.

*Economic indicators: Industrial production data in the U.S. is expected to be made public (0.2%e. m/m).

Economic environment

China`s economy grew less than expected in the 3Q21. Official figures for China`s GDP made public this morning confirmed a 4.9% annual rate of expansion during the third quarter of 2021 (0.2% quarterly), figure that set below the estimated 5.2%, which confirms a slowdown in the world`s second largest economy. Industrial production increased 3.1% annually and fixed investment grew 7.3%, both below expectations. New credit regulations in the real estate market and disruptions in the supply of electricity limited growth. Chinese authorities implemented regulations in order to reduce available credit for the purchase of homes and financing real estate development projects, which has affected property sales and slowed down the sector – and represents 25% of GDP. Investment in infrastructure on behalf of local governments also decreased after efforts were made to control the excess debt in the country. Lastly, energy scarcity (coal) forced several industries to stop or reduce their production during the quarter, which also contributed to the slowdown. On the positive side, retail sales increased 4.4% and unemployment fell to 4.9%; even though consumption remains under pre-pandemic levels. It`s estimated that China`s economy could continue slowing down in the 4Q21 at a 3%-4% annual rate because the scarcity of electricity is expected to continue affecting activities towards winter. Nevertheless, growth is expected to exceed the 6% annual target, which is why there is no urgency to implement new fiscal or monetary stimuli.