BEIJING (Reuters) – China’s economy is expected to recover steadily in the rest of the year, boosted by stimulus measures to reverse the damage from the coronavirus crisis, but weak global demand and rising Sino-U.S. tensions are key risks, a Reuters poll showed on Friday.
The world’s second-biggest economy is now expected to expand by 2.2% in 2020, according to the median of 42 analysts surveyed by Reuters, up from 1.8% projected in the last poll in April.
But that pace would still be the weakest since 1976 – the final year of Mao Zedong’s Cultural Revolution.
China’s economy expanded 3.2% in the second quarter from a year earlier, following a record 6.8% slump in the first three months of the year as the virus and strict measures to contain it paralysed much of the country.
But analysts warn that the rebound is heavily reliant on state-led investment, while consumption remains weak. National disposable income per capita fell 1.3% in the first half of the year, according to official data.
Manufacturing and construction have snapped back relatively quickly, thanks largely to a massive infrastructure push and a rebound in homebuilding. But the services sector has lagged, with the catering, hospitality and entertainment sectors struggling to get back to normal amid worries of a resurgence of coronavirus cases and cautious consumer sentiment.
Exports have improved somewhat, largely due to massive demand for medical gear as the rest of the world battles the pandemic, though the shock of the health crisis is expected to depress global demand for some time to come.
“We still see growth uncertainties ahead from a bumpy and uneven reopening in other countries, a less favourable policy environment, and the loss of strong growth driver in consumption/services amid elevated uncertainty in the labour market,” said analysts from Bank of America Merrill Lynch.
Deteriorating relations between Washington and Beijing are also clouding the outlook, though a Phase 1 trade deal signed earlier this year still appears to be intact.
In a dramatic worsening of ties this week, the United States demanded China shut its Houston consulate on accusations of “intellectual property theft”. China on Friday ordered the U.S. to close its consulate in the southwestern city of Chengdu.
“Heightened U.S.-China tension, supply chain decoupling pressures and a subdued profit outlook could hit corporate sentiment and depress trade and manufacturing activities,” UBS Economist Tao Wang said.
FISCAL STIMULUS TO SPUR GROWTH
With the economy on the mend, China’s central bank does not see an immediate need to ease monetary policy further, but will keep conditions accommodative to support the recovery, policy sources told Reuters.
Analysts expect China will lower its one-year loan prime rate (LPR) by another 10 basis points (bps) to 3.75% by the end of 2020. It has been cut by 46 bps since last August.
The poll also predicted no change to the current benchmark deposit rate. The PBOC has kept it untouched at 1.5% since October 2015.
“Economic activity continued to strengthen going into Q3, and fiscal policy is set to boost activity for the remainder of the year,” Martin Rasmussen, China Economist with Capital Economics said in a note.
“That should allow the PBOC to step back from easing and instead focus on the financial risks that have accumulated this year.”
China’s consumer price index (CPI) in 2020 will likely rise 2.7% from the previous year, slowing from a 2.9% rise in 2019, according to the poll.
Analysts with Nomura predicted higher food prices in coming weeks as much of the country is battered by torrential rain and floods, but said the impact will likely be short-lived.
(Polling by Shaloo Shrivastava in Bengaluru and Jing Wang in Shanghai; Reporting by Lusha Zhang and Kevin Yao; Editing by Kim Coghill)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
