China: Activity slowdown and LPR hold – ING
ING’s Lynn Song expects China’s July data to show continued sluggish momentum, with only a modest rebound and weak Retail Sales at 1.7% year-on-year. Fixed Asset Investment is forecast to contract further, while Industrial Production remains relatively firm.
ING analyst Lynn Song anticipates China's July economic indicators will reveal a continuation of sluggish growth, with a slight improvement and modest retail sales growth. Fixed asset investment is projected to decline further, while industrial production remains robust. Despite the Politburo's fiscal stimulus, investment is anticipated to stabilize, yet loan prime rates are expected to remain static.
China will release its domestic activity data for July on Monday, signaling ongoing weakness following the earlier subpar PMI reports. A tentative rebound is likely, but retail sales are projected to stay lackluster at 1.7% year-on-year. Fixed asset investment may contract to -6.3% year-on-year, while industrial production continues to outpace, decelerating to 5.0% year-on-year.
Following the July fiscal meeting, investment might pick up in the following months. On Thursday, China will disclose whether loan prime rates will remain unchanged, with the 1-year and 5-year rates pegged at 3.0% and 3.5%, respectively.
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