More depressing news on China’s economy


World Finance & Economy
For image text, go to https://www.bbc.com/news/business-46755158 (China's economic slowdown: How worried should we be?)
More depressing news on China’s economy

PORT MORESBY: Economists are predicting that China’s economy is heading for a deflation with producer prices likely contracting in the second half of this year.

This is more bad news for the already erratic global economy fueled by the US-China world trade war.

As more and more negative financial and economic forecasts unfold daily, more and more repercussions befall other smaller economies.

The latest being the reported poor manufacturing indicators in the US and Europe, sparking concerns that the US is heading for a recession.

Here’s what the so-called economists are saying about China, as reported by Bloomberg:

China’s economy will just about escape deflation in 2019, survey says

ECONOMY
Tuesday, 26 Mar 2019
2:22 PM MYT

BEIJING: China’s economy will flirt with deflation this year, with producer prices likely contracting in the second half, according to economists.

Factory-gate prices will grow by just 0.3 percent in 2019, according to the median estimate of 15 economists in a Bloomberg survey. That’s down from the forecast of 0.8 percent seen last month. Some said prices could begin contracting as soon as July, with negative price growth remaining until early 2020.

The outlook for producer-price gains in the next two years was also cut by almost half to 0.8 percent in 2020 and 1.3 percent in 2021, suggesting a prolonged battle with weak demand and declining industrial profits.

The rekindled deflation risks in China add to global concerns on growth. Domestically, tepid price gains bring greater pressure on company debt repayments as their profit shrinks, and weaker fiscal revenues.

The People’s Bank of China started cutting interest rates when factory-price growth stayed negative between 2012 and 2016, although it is less likely to repeat that course in 2019 amid a new focus on targeted fiscal stimulus.

“Interbank market rates will likely decline further” on slowing producer prices, said Lu Zhengwei, chief economist at Industrial Bank Co. in Shanghai.

The divergence between factory inflation and faster consumer price gains will worsen the pressure on manufacturers’ profits, he said. - Bloomberg

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