China’s economy set for V-shape recovery as coronavirus cases level off soon and stimulus kicks in, says Credit Agricole CIB
- The French bank sees first-quarter growth easing to 3.5 per cent, full-year expansion at 5.7 per cent as Beijing cuts rates and injects liquidity
- Yuan to strengthen to 6.9 per US dollar as the economy gets back on track as early as the second quarter, economist says
The coronavirus outbreak in China has almost reached its peak and the economy could see a V-shape recovery, according to Credit Agricole CIB.
The French investment bank expects China’s first-quarter gross domestic product growth to slow to 3.5 per cent year on year before averaging 5.7 per cent for the full year on the back of policy stimulus to put the economy back on track, according Dariusz Kowalczyk, the bank’s chief China economist and senior emerging market strategist.
Without the central bank’s stimulus, the world’s second-largest economy could expand by 4.6 per cent in 2020 versus 6.1 per cent in 2019 that was also the slowest since 1990, he said.
Credit Agricole CIB’s first-quarter forecast is gloomier than some in the market. Dong Chen, senior Asia economist at Pictet Wealth Management, last week lowered his base-case forecast to a range of 4 to 4.5 per cent, from 6 per cent previously.
Economic activity across many sectors, including real estate and manufacturing, stopped completely this month, as China put dozens of cities under lockdown to contain the epidemic that has so far infected more than 45,000 people and claimed more than 1,110 lives, mostly in mainland China.