China economy: ‘worst is yet to come’ with trade war tariffs likely to escalate, Nomura economists say
- Chinese gross domestic product to increase by 6.1 per cent in the second quarter and only 6.0 per cent over the second half of the year
- High debt levels restrict Beijing’s room to manoeuvre on monetary easing, with better-than-expected first quarter growth proving ‘illusory’
For China’s economy, already bruised from the trade war with the United States and a series of sluggish data, “the worst is yet to come” in the second half of this year, Nomura analysts have warned.
Headwinds continue to mount, including lingering uncertainties over trade tensions with the US, and the possibility of further US tariffs. Beijing’s scope for policy easing in response is limited, economists from the Japanese bank said at a press conference in Hong Kong on Tuesday.
The economists, led by Lu Ting, said that the better-than-expected 6.4 per cent growth in China’s economy in the first quarter, was a blip that “proved to be illusory”. They expect Chinese gross domestic product (GDP) to increase by 6.1 per cent in the second quarter and only 6.0 per cent over the second half of the year.
The January-to-March period was driven by record-high exports, in part because Chinese and American companies sought to “front-load” the shipment of goods to avoid higher tariffs threatened by the US.
