The world’s second largest economy is about to become the center of investor attention, especially in Asia, this week as they are preparing to release a deluge of economic data. They will release critical data like Q1 gross domestic product (GDP), March retail sales, fixed asset investment (FAI) and industrial output.
We are expecting China’s GDP to grow at an annual 7.3 percent. This would be the lowest pace of growth since 2009 and well below the Q4 2013 reading of 7.7 percent. This is thanks to tight credit conditions, still we expect industrial production to rise 9 to 9.5 percent on the year. We expect FAI to come in higher at 18.2 percent and retail sales growth is expected to grow at 12.5 percent year on year.
No Added Stimulus to Boost Growth
Last week, China’s Premier Li Kegiang said Beijing will not take any short term easing measures to help with this economic volatility. The next day the vice governor of the PBOC (People’s Bank of China) said the bank would be very careful with implementing further stimulus measures. The bank feels they are less efficient than natural market forces when the economy needs a boost.
Turning our attention to Singapore, we are seeing a very choppy recovery in this economy. They just released their advanced reading of the Q1 GDP which showed the city state’s economy grew at 5.1 percent year on year. This was in line with estimates but below the 5.5 reading of Q4 2013. After the release the USD/SGD lost 0.3 percent. It had been at a five month high.
The RBA Expected to Stand its Ground on Policy
On Tuesday, the Reserve Bank of Australia (RBA) will release its minutes from its last policy meeting. We are expecting the minutes to confirm the bank’s neutral bias regarding rates. The minutes will also be watched for any signs of worry concerning housing prices, as they continue to surge higher and strengthen. We also expect the RBA to jawbone the ever strengthening Aussie Dollar. Housing starts should show a solid bounce reflecting a lagging response from last year’s building approvals.
Many Asian and Pacific Rim markets will shut for Good Friday. These markets include: Singapore, Australia, New Zealand, Indonesia, Hong Kong and the Philippines.
Binary Options Take for the Day
Commodities. Watch for volatility in aluminum copper and gold as China’s data will impact mines especially in Australia.
Discussion
Everyone is worried that China’s GDP will grow at seven percent or 7.3 percent. Last time I read a good macroeconomic text, in my graduate program, seven percent growth is good, if not a little heated. What are your thoughts? Sound off in comments below.