Chinese Monthly Update – May 2012
Partial indicators for April were disappointing across the board relative to optimistic market expectations, but we remain happy with our […]
- Partial indicators for April were disappointing across the board relative to optimistic market expectations, but we remain happy with our longheld views for China’s growth outlook. Slowing activity has been driven by both an easing in domestic demand, and weak external demand – global economic uncertainty, particularly in Europe, is likely to provide an ongoing drag on the economy. The property market continues to weaken in response to the government’s curbs on property.
- Although we believe China can still engineer a soft landing in the near-term, our expectations of only a moderate slowing in growth for the current quarter is looking a little less certain. Nevertheless, recent policy stimulus – including a 50bp cut to reserve requirements (RRR) – should help to support growth later in the year. More policy loosening will be needed to achieve our GDP growth expectation of around 8 per cent in 2012 and 2013, consistent with potential.
- Our expectations for policy loosening include two to three cuts in the RRR in 2012, and one cut to the lending rate later in the year (contingent on CPI inflation falling below 3 per cent).
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About the Author
James joined NAB early in 2011 from the Reserve Bank of Australia where he worked for four years. He was involved in analysis of overseas economies and commodities, as well as business investment and residential property within Australia.
Before this, James taught economics at the University of Western Sydney, and was employed as an economic forecaster with Integral Energy.
He graduated from the University of Western Sydney (with first class honours in Economics) and was a recipient of the Honours Economic Society Award (HESA) in 2006. James also holds a Bachelors degree in Law.
At NAB, James is responsible for monitoring and forecasting the emerging Asian economies with a particular emphasis on China, and is also a member of the commodities team.
