A Reuters poll of economists suggests growth slowed significantly. The consensus view of 0.5% expansion over the first quarter is much lower than the 2.2% quarter-on-quarter growth in the January-March period, which captured the initial bounce after lockdown restrictions were lifted.
Year-on-year growth is expected to come in at a more impressive 7.3%, but that is inflated by base effects from the low level of growth in the same period last year.
Any optimism there was early this year has evaporated. Activity has slowed, the economy is sliding towards deflation, and investors have shunned China’s stocks,
bond and currency. China’s economic surprises index last week hit a one year-low.
Later in the week China’s central bank sets its key one- and five-year lending rates. A sub-consensus Q2 GDP print on Monday could tilt expectations toward further easing.
Looking beyond China, inflation data from Japan and New Zealand on Friday and Wednesday, respectively, and unemployment figures from Australia on Thursday will be the most important points on the regional calendar for investors this week.
These come amid a renewed wave of bullish sentiment across local and world markets, in large part stemming from surprisingly tame U.S. inflation data. The dollar and U.S. bond yields have slumped, stocks and risk appetite have taken off.
