In today’s briefing:
- India Watch: Why India Suffers when China Is Open for Business
- BoE: Ready to Slow
- CX Daily: A Metal Tycoon’s Liquidity Woes Disrupt China’s Copper Trade
- IMF Raises China’s 2023 Growth Forecast to 5.2% as Economy Reopens
- ECB: Forceful Pre-Commitment
India Watch: Why India Suffers when China Is Open for Business
- The core Adani Group stocks have gone down 35.7% in the last 5 days
- The -35.7% hit to Adani Group came just as the company was gearing up to a high-profile follow-on public offering of shares owned personally by the Adani family.
- As China has reincarnated, data suggests it’s time for India to hand back the manufacturing reins.
BoE: Ready to Slow
- The BoE hiked by another 50bps in Feb-23, as expected. Pay settlements and services inflation are too high to tolerate, although two members voted for no change again.
- Inflation’s forecast fall below the target is insufficient to stop hikes when the skew is so high. Stable energy prices could keep inflation above 2% in 2-3 years.
- We maintain our call for two more 25bp rate hikes, leaning against excessive wages. Reanchoring expectations depends on monetary policy’s path, justifying frontloading.
CX Daily: A Metal Tycoon’s Liquidity Woes Disrupt China’s Copper Trade
In Depth: A metal tycoon’s liquidity woes disrupt China’s copper trade
China warns incoming Czech leader over call with Taiwan’s Tsai
China’s factory activity shrinks for sixth straight month, Caixin PMI shows
IMF Raises China’s 2023 Growth Forecast to 5.2% as Economy Reopens
- The International Monetary Fund (IMF) raised its estimate for China’s GDP growth this year to 5.2% from a 4.4% projection made in October
- The expected rebound will moderate in 2024 however, with the pace of expansion slowing to 4.5% before settling at under 4% over the medium term amid shrinking business dynamism and slow progress on structural reforms
- China’s GDP rose 3% in 2022, the first time in over four decades that the country’s growth fell below the global average according to the IMF.
ECB: Forceful Pre-Commitment
- The ECB followed through with another 50bps rate hike and restated a pre-commitment to do so again in March. Underlying inflationary pressures remain too high.
- Upside inflation risks have become more balanced in the EA, unlike the UK, but the high modal outlook justifies more tightening. Subsidised energy prices are no reason to stop.
- We maintain our call for March’s 50bp ECB hike to be the last forceful one, with a 25bp deposit rate hike in May taking it to a 3.25% peak.
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