5 Mar 2015
China recognizes growth slowdown, lowers GDP target to 7.0% - Nomura
FXStreet (Barcelona) - With China lowering its growth target, Asian Economists at Nomura, comment that the downward revision suggests the Chinese government clearly recognizes the growth slowdown.
Key Quotes
“Bloomberg reports that Premier Li Keqiang’s Government Work Report to the National People’s Congress (NPC) has lowered the 2015 GDP growth target to “around 7.0%” from “around 7.5%” in 2014, in line with market expectations.”
“The CPI inflation target was also cut to 3.0% from last year’s 3.5%.”
“The lower growth target, in our opinion, reflects the government’s awareness of an economic “new normal” – of slower growth and the urgent need for structural reform.”
“The government has lowered other 2015 targets as well: for fixed asset investment growth, trimmed to 15.0% from 17.5% in 2014; retail sales growth down to 13.0% from 14.5%; foreign trade growth to 6.0% from 7.5% – all supporting the idea that the government clearly recognizes the growth slowdown.”
“We maintain our view that GDP growth will slow to 6.8% in 2015, slightly below the government’s target.”
“Believing monetary policy will remain accommodative this year, we continue to expect one more 25bp policy interest rate cut in Q2 and three cuts to the banks’ reserve requirement ratio, of 50bp each quarter through the rest of the year.”
Key Quotes
“Bloomberg reports that Premier Li Keqiang’s Government Work Report to the National People’s Congress (NPC) has lowered the 2015 GDP growth target to “around 7.0%” from “around 7.5%” in 2014, in line with market expectations.”
“The CPI inflation target was also cut to 3.0% from last year’s 3.5%.”
“The lower growth target, in our opinion, reflects the government’s awareness of an economic “new normal” – of slower growth and the urgent need for structural reform.”
“The government has lowered other 2015 targets as well: for fixed asset investment growth, trimmed to 15.0% from 17.5% in 2014; retail sales growth down to 13.0% from 14.5%; foreign trade growth to 6.0% from 7.5% – all supporting the idea that the government clearly recognizes the growth slowdown.”
“We maintain our view that GDP growth will slow to 6.8% in 2015, slightly below the government’s target.”
“Believing monetary policy will remain accommodative this year, we continue to expect one more 25bp policy interest rate cut in Q2 and three cuts to the banks’ reserve requirement ratio, of 50bp each quarter through the rest of the year.”