China: Growth momentum regained, policy stance tweaked - ANZ

ANZ analysts note that the China’s high frequency economic indicators confirm that growth is bottoming out.

Key Quotes

“In particular, leading indicators such as money supply data and the producer price index (PPI) inflation showed signs of acceleration in March. With Q1 GDP registering 6.4%, we now revise our GDP forecast to 6.4% for full-year 2019, from 6.3% previously.”

“As the growth momentum of the Chinese economy picks up, we believe that policymakers will re-assess the need for further stimulus. The government will maintain a counter-cyclical stance, which will primarily be expressed through measures that support structural transformation.”

“Thanks to the strong credit data in March, the People’s Bank of China (PBoC) appears to be more cautious about further easing. The policy stance will likely place an emphasis on ‘maintaining strategic patience’ and ‘alignment with fiscal and other policies’. Consequently, the likelihood of a cut in the reserve requirement ratio (RRR) in Q2 has decreased.”

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