Recent domestic economic data has failed to provide any clarity
on the direction of the US economy or the monetary policy and the
market participants are now hoping that China's Q1 GDP, scheduled
to be released tomorrow would provide some answers about what is
happening in the world's second largest economy.
There are some "whispers" in the market about the number being
higher-than-expected; the whisper number being around 9.0%
versus consensus estimate of about 8.4%.
This morning, the
World Bank cut its growth forecast for China
to 8.2% from its earlier forecast of 8.4% for 2012, citing U.S. and
European economic problems and Chinese lending and investment curbs
imposed to cool an overheated economy.
Asian Development Bank
came out with a stronger expectation yesterday- 8.5% in 2012, on
the back of strong investment and rising private consumption.
The Chinese Premier Wen, on the other hand has stated said that
GDP may only grow by 7.5% in 2012.
While there is no doubt that China has been slowing, the
question is whether it can avoid a hard-landing.
Also, while there is always a big question on the reliability of
official Chinese data, the market is usually pretty sensitive to
the Chinese GDP data and if the numbers come in below expectation
tomorrow, the market may sell off.
Some of the recent numbers have been contradictory and
confusing. For example, the official PMI showed expansion but the
HSBC PMI for March showed significant contraction. More recently,
the narrow trade surplus for March surprised everyone, as the
exports grew much faster than expected.
What is your expectation about the Chinese GDP? Will it provide
a direction to the market tomorrow?
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