Publications

We raise the China GDP forecast based on the recent China-US Geneva Agreement and the 3nd round stimulus. We also analyze the recent economic development and the policy outlook.

Annual inflation in April surprises on the upside (5.2%), driven by regulated items and goods. Core inflation (excluding food) also increases. Doubts persist regarding the speed of future moderation. This result may lead to upward revisions of forecasts and uncertainty about the future monetary policy stance.

Amid the China-US trade war, we still raised our China 2025 and 2026 GDP forecast due to the jumbo size stimulus package, the new growth engine high-end manufacturing to support growth and lower-than-expected tariff imposed.

The consumer price index increased 0.11% m/m in December. The month’s result is explained by the seasonal increase in transportation prices, while on the other hand food prices decreased. The year-on-year inflation rate was 2.0% in December (center of the BCRP target range).

The Chinese economy is experiencing structural rebalancing amid deep real estate adjustment. Due to the large-scale stimulus package, we believe the economy will bottom out in the near future.

The inflation rate for July was 0.24% MoM. This outcome is attributed to the increase in prices of food items such as chicken, corn, and potatoes, as well as higher transportation costs driven by the seasonal impact of national holidays and rising fuel prices. The YoY rate stood at 2.1%, within the target range of the BCRP.

There are a wide number of important economic indicators that are not broadly disseminated when we refer to the economic situation and its forecasts. In this opportunity, we will focus on the most relevant macroeconomic balances: external and fiscal.

After 6 months in office, the government has made significant progress in improving the fiscal balance, which in turn resulted in a reduction of monetary issuance and a deceleration of inflation. The challenge now is to consolidate the fiscal surplus and dismantle FX-market restrictions to foster sustainable growth.