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16.09.201914:53 Forex Analysis & Reviews: Very weak data from China is alarming, yet ING says we are confident

Long-term review

Exchange Rates 16.09.2019 analysis

Investments in fixed assets of China and industrial production in August were very weak while retail sales growth was moderate. Even the authorities acknowledge that it will be difficult to achieve 6% GDP growth announced earlier. Leading analysts are already lowering growth forecasts for this year and expect new incentives from the government. "In connection with the expected further damage from trade and technological wars, we are revising our forecast for GDP growth to 6.0% in 2019, particularly 5.7% and 5.8% year on year in the third and fourth quarter of this year, respectively. Previous forecasts assumed GDP growth of 6.3% in 2019, then 6.1% and 6.3% year on year in the third and fourth quarter of this year, "the ING said.

Most likely, the tax incentive policy will include large infrastructure projects, as well as projects aimed at accelerating technological progress. This should ensure investment growth to support GDP and stabilize the labor market, which, in turn, will give an impetus to the growth of retail sales. Monetary policy actions are likely to include additional reductions in reserve ratios, as well as lower interest rates.

Irina Maksimova,
Analytical expert of InstaSpot
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