8 Mar 2016
China's growth outlook lowered - Nomura
Analysts at Nomura noted that Premier Li Keqiang’s Government Work Report to the National People’s Congress (NPC) has lowered the 2016 GDP growth target to “6.5-7.0%” from “around 7.0%” in 2015, while the CPI inflation target was left unchanged at 3.0%.
Key Quotes:
"These economic targets are in line with our expectation."
"The adjustment of the growth target reflects the authorities’ recognition of strong headwinds to the economy, particularly overcapacity in upstream industries and high housing inventory.
Achieving even the lower bound of the growth target, however, will still be challenging, in our view, given the normalisation of financial services growth (after an extraordinary contribution to GDP growth in 2015), a reduction of overcapacity and housing inventory, and the constraint of high leverage in both the corporate and local government sectors."
Key Quotes:
"These economic targets are in line with our expectation."
"The adjustment of the growth target reflects the authorities’ recognition of strong headwinds to the economy, particularly overcapacity in upstream industries and high housing inventory.
Achieving even the lower bound of the growth target, however, will still be challenging, in our view, given the normalisation of financial services growth (after an extraordinary contribution to GDP growth in 2015), a reduction of overcapacity and housing inventory, and the constraint of high leverage in both the corporate and local government sectors."