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10 Apr 2013
Forex Flash: March and Q1 Chinese macro data face downside risks - Nomura
FXstreet.com (Barcelona) - Nomura economist Zhiwei Zhang notes that according to the 21st Century Business Herald, electricity consumption growth on a year-on-year basis, may have slowed in March from 5.3% in January and February combined.
He adds that official data show railway freight traffic contracted by 3.3% y-o-y in March from 0.0% in January and February combined. Further, electricity consumption growth and freight traffic growth are both positively correlated to industrial production (correlation coefficient at 0.72 and 0.63, respectively). He feels that the weak growth of both indicators suggests that industrial production growth may have slowed further from 9.9% in January-February. He therefore is revising down his March IP growth forecast to 9.7% YoY from 10.2%. He adds, “We maintain our Q1 GDP growth forecast of 8.2% y-o-y, as tertiary sector growth likely improved, driven by a rebound in the housing sector. Nonetheless, we acknowledge that there are downside risks to our GDP growth forecast. We maintain our view that the recovery is weak and not sustainable, and we continue to expect policy tightening to reduce growth significantly to 7.3% in H2.”
He adds that official data show railway freight traffic contracted by 3.3% y-o-y in March from 0.0% in January and February combined. Further, electricity consumption growth and freight traffic growth are both positively correlated to industrial production (correlation coefficient at 0.72 and 0.63, respectively). He feels that the weak growth of both indicators suggests that industrial production growth may have slowed further from 9.9% in January-February. He therefore is revising down his March IP growth forecast to 9.7% YoY from 10.2%. He adds, “We maintain our Q1 GDP growth forecast of 8.2% y-o-y, as tertiary sector growth likely improved, driven by a rebound in the housing sector. Nonetheless, we acknowledge that there are downside risks to our GDP growth forecast. We maintain our view that the recovery is weak and not sustainable, and we continue to expect policy tightening to reduce growth significantly to 7.3% in H2.”