15 Jul 2013
Flash: Chinese liquidity squeeze abates? – NAB
FXstreet.com (New York) - According to National Accounts data released earlier, the Chinese economy grew 1.7% in the June quarter to be 7.5% larger than the same period last year.
“This result is in line with our forecast for the quarter, but is a solid outcome relative to the recent spate of soft partial indicators nonetheless. Revised q-o-q growth rates suggest the economy’s growth momentum has stabilized at a slower pace than we saw towards the end of 2012.” notes the NAB Research Team.
While some of the slowing has been an intentional attempt by authorities to achieve more sustainable (and balanced) growth, maintaining this pace of growth (6.8% saar) for H2 2013 would see annual growth dip below the government’s target of 7.5%. While this could suggest some downside risk to our outlook, we are maintaining our forecast (for now) of 7.5% growth for 2013. According to the Team, “Regarding the policy outlook, the relatively hardline stance taken by policy makers in the past month suggests that they may keep monetary conditions tighter for a little while longer. The liquidity squeeze that created market jitters during June has largely subsided, although conditions remain tighter than they were earlier in the year.”
“This result is in line with our forecast for the quarter, but is a solid outcome relative to the recent spate of soft partial indicators nonetheless. Revised q-o-q growth rates suggest the economy’s growth momentum has stabilized at a slower pace than we saw towards the end of 2012.” notes the NAB Research Team.
While some of the slowing has been an intentional attempt by authorities to achieve more sustainable (and balanced) growth, maintaining this pace of growth (6.8% saar) for H2 2013 would see annual growth dip below the government’s target of 7.5%. While this could suggest some downside risk to our outlook, we are maintaining our forecast (for now) of 7.5% growth for 2013. According to the Team, “Regarding the policy outlook, the relatively hardline stance taken by policy makers in the past month suggests that they may keep monetary conditions tighter for a little while longer. The liquidity squeeze that created market jitters during June has largely subsided, although conditions remain tighter than they were earlier in the year.”