China 2021 GDP to beat target on COVID bounce: Nikkei survey

china 2021 gdp to beat target on covid bounce nikkei survey

Sumary of China 2021 GDP to beat target on COVID bounce: Nikkei survey:

  • HONG KONG — China’s economy looks to expand 17.9% for the January-March quarter, a growth figure inflated by the coronavirus-related crash in the year-ago period, a survey of 32 economists by Nikkei and Nikkei Quick News finds..
  • The economists predict 1.0% growth on a seasonally adjusted, quarter-on-quarter basis for the first three months of 2021, as momentum slows from a 2.6% gain in the fourth quarter of 2020..
  • Of the 24 valid responses, 19 economists expect a rate of 18% or more including Aidan Yao, senior emerging Asia economist at AXA Investment Managers, who forecast 18.8% growth..
  • Sequentially, the January-March growth “should decelerate relative to Q4 due to the impacts of the virus resurgence and the associated tightening of social restrictions,”.
  • Tommy Wu, lead economist at Oxford Economics, forecast 19.3% growth for the first quarter and agrees that this figure reflects a rebound from last year’s downturn..
  • “While industrial production remained robust in January-February, supported by strong export demand, the momentum in fixed asset investment and household consumption fell amid travel restrictions and caution during the Chinese New Year holidays,”.
  • But with a full-year forecast of 8.9%, Wu is optimistic that robust growth momentum will resume after the first quarter as the recovery in travel and logistics helps Chinese household consumption gain strength..
  • All economists in the survey forecast GDP growth topping 6% for 2021, the goal set by China at the National People’s Congress in March..
  • Strong global demand for pandemic-related and electronic products will continue supporting China’s manufacturing sector and exports, said Bank of East Asia economist Celia Lam, who forecast full-year growth of 8.6%..
  • “The well-controlled pandemic within China will uplift the consumer and business sentiment, underpinning the consumption and investment,”.
  • Samuel Tse, economist and strategist at DBS Bank, forecasts 10.5% growth for 2021 — the highest among those in the survey — and thinks a strong global recovery will boost China’s industrial production and exports from the second quarter onward..
  • But JD Technology Group chief economist Shen Jianguang, who gives a more reserved forecast of 8.4%, said China’s recovery still faces difficulties from structural imbalances among industries, regions and companies of different sizes..
  • Moody’s Analytics economist Christina Zhu thinks new COVID outbreaks and vaccination delays would disrupt production and dampen consumption..
  • “Slow vaccination will delay travel and the recovery of the services sector, threatening to destabilize employment and income prospects, and thus hurting consumer confidence,”.
  • China already faces problems tied to nonperforming loans and debt caused by supportive business policies, and credit defaults will continue this year, said Cheng Shi, chief economist at ICBC International..
  • Wei Yao, chief Asia and China economist at Societe Generale, echoed Cheng’s view and said bond defaults could bring tighter credit conditions, which would hinder growth..
  • But Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets, calls trade tensions and company sanctions the top threat for China’s economy this year..
  • Arjen van Dijkhuizen, senior economist at ABN AMRO Bank, also expects U.S.-China relations to remain challenging as the chilly American stance commands bipartisan political support..
  • “The new administration may well continue with strategic export and [foreign direct investment] restrictions and sanctions, but we do not expect a revival of the bilateral tariff war,”…

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