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Asia-Pacific

China

Struggling for momentum

China’s post-Omicron rebound has fizzled out and the prospects for near-term growth are poor. Virus outbreaks are happening with increasing frequency. The housing market remains in a downward spiral. And exports look set to drop back before long. To make matters worse, credit growth has so far been unresponsive to policy easing. More support is on its way but it will probably be too late too little to prevent output from stagnating this year. And once the economy does return to growth, it will be at a slower pace than in the past.

18 August 2022

China’s equities and the renminbi may remain under pressure

We expect external and domestic headwinds to keep Chinese equities and the renminbi under pressure over the rest of 2022.

15 August 2022

China Activity & Spending (Jul.)

The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector. We think the outlook will remain challenging in the coming months as exports turn from tailwind to headwind, the property downturn deepens, and virus disruptions remain a recurring drag. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

15 August 2022
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PBOC turns less dovish on inflation

The PBOC’s latest monetary policy report struck a less dovish tone, warning that inflationary pressure may increase in the near-term. We think these concerns are overdone and that inflation is more likely to drop back over the rest of the year. But for now at least, the PBOC appears to see inflation risks as yet another reason to maintain its restrained approach to stimulus.

China Bank Lending & Broad Credit (Jul.)

Credit growth dropped back last month, with property market jitters weighing on bank lending. It may continue to disappoint in the near-term given that sentiment among homebuyers is likely to stay weak and government borrowing is on course to slow.

12 August 2022

Better news on inflation, as growth disappoints

The recent national accounts data show most countries experienced a difficult second quarter. However, there was some more encouraging news on inflation – which already appears to have peaked in a few countries. With growth set to remain weak, and inflation likely to fall back further over the coming months, we are sticking with our view that the region’s tightening cycles will prove short lived.

China Consumer & Producer Prices (Jul.)

Consumer price inflation rose to a 24-month high in July and is now nearing the government’s target of 3%. But that is still very low by global standards, and we think headline inflation is close to a peak and will drop back over the coming quarters. Meanwhile, producer price inflation fell to its lowest in 17 months.

10 August 2022

China’s copper imports are the only bright spot

Commodity import volumes remained lacklustre in July, consistent with subdued activity in heavy industry and construction. We think import growth should tick up in the coming months in response to higher infrastructure spending and a modest pick-up in activity. But renewed lockdowns pose a downside risk. Oil and the Gulf Drop-In (9th Aug): What’s the outlook for oil prices and what does that mean for Gulf economic outperformance? Join economists from our Commodities and Emerging Markets teams for this 20-minute briefing. Register now.

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