China: Growth fell short of expectations in May – Standard Chartered


According to analysts at Standard Chartered, China’s growth fell short of market expectations in May as industrial production (IP) growth decelerated to 5% y/y from 5.4% in April, below market expectations of 5.4%.

Key Quotes

“The longer May Day holidays weighed on production activity but boosted retail sales growth to 6.4% y/y in May in real terms from 5.1% previously. Fixed asset investment (FAI) growth moderated to 2.7% y/y in May in real terms, from 4% in April, due to slower growth in infrastructure and land investment. The labour market remains stable, with the surveyed unemployment rate unchanged at 5% in May.”

“While growth has underwhelmed in the first two months of Q2, it could pick up strongly in June as China tends to post slow growth at the beginning of a quarter and stronger growth in its final month. In other words, overall GDP growth may not have changed much from 6.4% y/y in Q1.”

“Nevertheless, uncertainty is rising due to the renewed trade conflict between the US and China. We estimate that 25% tariffs on all US imports from China could deduct 1.2ppt from China’s annual GDP growth.”

“We believe China can still achieve its GDP growth target of 6-6.5% for 2019. The proactive fiscal policy approved for 2019 should offset much of the negative impact of higher US tariffs.”

“We forecast additional cuts of 100bps to the reserve requirement ratio (RRR) or an equivalent amount of liquidity injection via targeted RRR cuts, medium-term lending facility (MLF) or targeted MLF in the rest of 2019. The PBoC is also likely to lower the MLF or the open-market-operation (OMO) rates.”

                         

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD hits highest since March amid US protests, European reopening

EUR/USD has jumped above 1.1150, trading at the highest since March. Protests in the US are grabbing the headlines and marginally supporting the dollar. European countries continue reopening their economies amid falling coronavirus statistics. 

EUR/USD News

GBP/USD resumes rally amid Brexit optimism, dollar weakness

GBP/USD is trading above 1.2550, extending its gains. Reports about British readiness to compromise in Brexit talks, conditioned on EU concessions, is helping boost the pound. US protests are eyed.

GBP/USD News

Bitcoin is three steps away from $14000

Bitcoin joins the list of bullish breakouts and leaves the relative highs at $14000 as a clear target in the short term. Ethereum continues to gain market share and sets the price level of $300 as a goal in the short term.

Read more

Gold trades with modest losses around $1735 level, downside seems limited

Gold traded with a mild negative bias through the early European session and was last seen hovering near the lower end of its daily range, around the $1735 region.

Gold News

WTI sits at three-month highs near $36.50 ahead of Russia’s decision, API

WTI (July futures on Nymex) broke its bullish consolidative phase to the upside in the European session and clinched fresh three-month highs at 36.48.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures