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Fitch estimates that China full-year growth to dip below 2% this year

  
Analysis, Economy

Fitch says China economic activity is to remain weak in 1H 2020

China
  • Projects China’s fiscal deficit to rise to 8% of GDP this year (2019 was 5.8%)
  • Says that much of China’s coronavirus policy response is still pending
I would take the headline estimate with a pinch of salt because I don’t think we will ever get the true figure of what China’s economic growth will be this year.
The fact that we may not get the usual NPC meeting to decide on the target shows that China may not present one to the world but instead focus on outlining more subjective economic achievements instead.
But we all know that whatever the case is, the economic damage is severe and will take a long time to recover. The fall in global demand because of shutdowns everywhere else will just compound more economic worries for China and also other countries this year.

India’s growth outlook worsens amid fears of extended lockdown

  
Analysis, Economy
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Growth forecasts for India’s economy, which before the Covid-19 global pandemic was projected to post a mild recovery, are getting bleaker as the government weighs whether to extend the 21-day nationwide lockdown.

Now, UK research consultancy Capital Economics projects India’s growth will slow to just 1 per cent in this fiscal year, the lowest pace in 41 years. “Coronavirus and measures to contain it will ravage the economy over the coming months,” said Capital Economics economist Shilan Shah. Fitch ratings agency, meanwhile, has slashed its 1920-21 growth projection to 2 per cent, a 30-year low.

On the domestic front, household spending and investment “is likely to collapse, with only a ramping up of government spending providing any support” while external demand will “weaken drastically too,” Shah said. The central bank’s responded with aggressive monetary loosening, but large-scale fiscal stimulus is also needed to prevent the drastic slowdown from “morphing into a contraction in annual output,” Shah said.

Capital Economics expects the lockdown, slated to end April 14, to be extended for up to three months and if so, “large parts of the manufacturing, construction, transport, retail, leisure and recreation sectors will grind to a halt.” US consultancy Boston Consulting Group also forecasts a protracted shutdown which it says India will only start lifting between end-June and second week of September.

The lockdown’s aimed at averting a catastrophic explosion of coronavirus cases — an Indian Council of Medical Research study suggests one unquarantined Covid-19 patient can infect 406 people in 30 days. But the shutdown’s also caused unprecedented disruption to India’s consumption-driven economy which even before the coronavirus shock was growing at six-year lows. Growth projections for 2019-20 range from around 4.5 per cent to 5.0 per cent. Gross Domestic Product growth for the 2019-20 third quarter, set for publication Friday, will be around 4.5 per cent, slightly ahead of the 4.3 per cent logged in the year-ago period, helped by a healthy crop output, economists say.

“The challenge for India versus its peers is starker if infections spread rapidly considering the higher density of population per capita and weaker health infrastructure,” UBS economist Tanvee Gupta Jain said. India looks to be a long way from the goal of “flattening the coronavirus curve” and preventing a surge that swamps the nation’s weak healthcare system. It took 59 days to reach the first 1,000 confirmed cases. But in just two days, the number of cases rose from 3,000 to 4,000 — and deaths from 75 to 100. The death toll in India stood at 111 Tuesday and coronavirus cases at 4,281, a 704 jump in 24 hours. Union Minister Prakash Javadekar said a decision on whether to extend the shutdown “will be declared at the right time.”

States favour shutdown extension

Many states are urging the government to extend the shutdown with Telangana’s chief minister K Chandrashekar Rao saying, “Economic recovery can come later. In the given situation, with India’s poor health infrastructure and big workforce, we have no other weapon.” India could face 100,000 to 1.3 million confirmed coronavirus cases by mid-May if the trend continues, according to a March 25 report by the COV-IND-19 Study Group. Already, tens of thousands of urban migrant workers have returned to their villages, potentially spreading the virus deep in India’s hinterland. (more…)

Will China lower its GDP target, or even scrap it altogether?

  
Analysis, Economy

Comments late in March from People’s Bank of China adviser Ma Jun expressed wariness of setting a target:

  • setting GDP target may force China to resort to flood-like stimulus
  • GDP growth between 4 to 5% will be difficult to achieve for China

Bloomberg have a follow-up piece

  • The coronavirus shock has influential Chinese economists and officials engaging in a previously unimaginable debate: should Beijing drastically reduce its economic growth target or even abandon it altogether?

The GDP target is usually set at the annual parliament meeting in March, which was delayed due to coronavirus.

A date for the National People’s Congress has still not been set, allowing for specuatliotn that perhaps there will be no GDP target this year.

Germany February industrial production +0.3% vs -0.8% m/m expected

  
Analysis, Economy

Latest data released by Destatis – 7 April 2020

  • Prior +3.0%
  • Industrial production WDA -1.2% vs -3.0% y/y expected
  • Prior -1.3%
Slight delay in the release by the source. Again, the most important thing here is the month as this pertains to February conditions, which have not been impacted by the virus outbreak and lockdown measures across the country and region.
Hence, you can look past the “better” readings here as they aren’t that meaningful anymore.
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