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China: 1Q16 GDP and March activity data preview - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Apr 14, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Tim Condon, Chief Economist at ING, thinks Chinese housing starts need to grow this year to hit the 10.5% fixed asset investment growth target.

    Key Quotes

    “1Q16 GDP and the usual March monthly data are due tomorrow at 10am local time. The consensus forecasts for 1Q GDP growth are 6.7% YoY and 1.5% QoQ SA (INGF 6.7%/1.3%, prior 6.8%/1.6%).

    The bounce in the manufacturing PMIs in March informs the consensus forecast of stronger industrial production growth (cons. 5.9%, prior (Jan-Feb) 5.4%). IP growth tracks GDP growth. The forecast for FAI growth is 10.4% YoY YTD, up from 10.2% in January-February. The forecast for retail sales growth is 10.2% YoY YTD, unchanged from January-February.

    We consider the March housing sales and starts data among the most important of the releases. Activity bounced hard in January-February, some of which we ascribed to pent-up demand released when financial markets stabilized. We think housing is crucial to the economic recovery this year and in particular that a bounce in housing starts this year following two consecutive 15% contractions is a necessary condition for hitting the 10.5% fixed asset investment growth target (10.0% in 2015). The official GDP growth target for 2016 is 6.5-7.0% (INGF and Bloomberg consensus 6.5%).”
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