China’s Economy Succumbs to Slowdown and Reignites Stimulus Talk
China's economic growth experienced a broad slowdown in April, with investment resuming declines, prompting renewed discussions about potential government stimulus measures. The breadth of the deceleration has brought the prospect of more aggressive policy easing back onto the agenda.
The April data has raised questions about the government's previous reluctance to introduce additional stimulus. This comes as a global energy crisis impacts factories and consumers worldwide. China had previously demonstrated resilience to the fallout from the Iran war.
According to Macquarie Group Ltd., the April economic figures suggest that China's gross domestic product (GDP) may expand by as little as 4.1% year-on-year in the second quarter. Such a performance could lead to incremental policy easing.
Goldman Sachs Group Inc. is maintaining its forecast for a 4.7% GDP gain in the April-June period. This compares to a 5% expansion recorded in the first three months of the year.
The People's Bank of China (PBOC) last lowered its policy rate and the reserve requirement ratio (RRR) approximately a year ago. Those actions occurred during the peak of trade tensions with the United States.