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Chinese Economic Data Weaker and Weaker

A set of disappointing Chinese macroeconomic data was published today which was a shadow of expectations. Chinese GDP in the first quarter had grown by 7% on that of the same time last year, but has slowed from the figure of 7.3% in the final quarter of last year. Growth in the industrial sector slowed to 5.6% and as such was the first time in history that Chinese industrial growth is below overall economic growth. Retail sales also grew weaker than expected: 10.2% YOY.

This is increasing pressure on Peking to relax its fiscal and monetary policy. However, the government is trying to avoid any excessive stimulative measures which could lead to an increase in state debt and overcapacity in the housing market and heavy industry. China needs to reduce its rates and reserve requirements to support its economic growth.

According to the monthly report by the International Energy Agency (IEA), increased demand for oil in 2015 could exceed forecasts, mainly due to colder weather and the steady recovery of the world economy.

Forecasts for world oil demand in 2015 have been put up by 90,000 barrels a day to 93.6 million. As such, demand is 1.1 million barrels a day more in comparison with the previous year. A reassessment of the forecast is connected to an increased demand for the heating of homes, offices and other buildings in OECD countries.

In their latest report, the USA’s Department of Energy indicated that exporting of energy resources could soon outstrip that of imports. By 2020 the country’s demand for resources from abroad could change fundamentally.

Despite the fact that prices for energy resources are currently lower than last year, the US government forecasts a continued growth in oil and natural gas extraction sectors over the next 5 years. North American extraction companies will continue to meet increased demand for energy in the country. Furthermore, as part of general extraction growth, production of gas, diesel and superlight fuels which the US could export abroad will also increase. Thus, the country could go from being a net importer of energy to a net exporter. The USA has been one of the largest energy importers in the world since the 1950s.

Political bargaining over the question of Greek debt continues. Friederike von Tiesenhausen, a representative of the German Ministry of Finances, has announced that the last tranche of the financial package offered to Greece will not be repaid in April. This has reduced expectations regarding the meeting of Eurozone finance ministers, due to be held later this month. It is expected that an agreement should be reached by the end of June.

Today the ECB convened; the outcome of which was to leave monetary policy untouched. During a press conference Mario Draghi didn’t say anything unforeseen by the markets. It’s still a bit early to pass judgment on the outcome of the ECB’s asset repurchase program.

Today it’s worth paying attention to the Bank of Canada and their decision on interest rates and their accompanying statement after the representatives of the central bank have met. Later on some data will be published which will reflect the change in American industrial production and also information from the US Department of Energy on oil reserves. It’s also worth taking a look at the Fed’s publication of the Beige book.

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