13 Feb 2015
Rising risks of a mini-hardlanding in China? – DB
FXStreet (Barcelona) - Zhiwei Zhang, Chief Economist at Deutsche Bank, comments that China might see a mini-hardlanding with GDP growth expected to drop below 6% in one or two quarters.
Key Quotes
“We define a mini-hardlanding as GDP growth dropping below 6% in one or two quarters. Growth in electricity production may turn negative. The official and HSBC PMIs may drop to 45 or lower.”
“As an indicative measure of our relative views on a scale basis, we would have put the probability of such a scenario in 2015 at around 10% before. Now we believe it has risen to roughly 20%.”
“March will be a critical time for policy makers. The macro data for January and February will become available in early March. We expect them to weaken further and surprise the government.”
“We maintain our baseline case of one interest rate cut in March and another in Q2, but we see risks that such cuts may be put off to later this year.”
Key Quotes
“We define a mini-hardlanding as GDP growth dropping below 6% in one or two quarters. Growth in electricity production may turn negative. The official and HSBC PMIs may drop to 45 or lower.”
“As an indicative measure of our relative views on a scale basis, we would have put the probability of such a scenario in 2015 at around 10% before. Now we believe it has risen to roughly 20%.”
“March will be a critical time for policy makers. The macro data for January and February will become available in early March. We expect them to weaken further and surprise the government.”
“We maintain our baseline case of one interest rate cut in March and another in Q2, but we see risks that such cuts may be put off to later this year.”