Brief Macro: Why China’s Stimulus Will Disappoint and more

In this briefing:

1. Why China’s Stimulus Will Disappoint
2. FLASH: UK GDP Resurgence Raises 1Q19 Forecast

1. Why China’s Stimulus Will Disappoint

By Lawrence Brainard, Chief Emerging Market Economist at TS Lombard

• In a Chinese version of QE the PBoC is flooding markets with liquidity
• Commercial banks will be slow to use it to boost lending to SMEs

2. FLASH: UK GDP Resurgence Raises 1Q19 Forecast

• UK monthly GDP exceeded all expectations by surging 0.5% m-o-m in Jan-19. Construction rebounded by even more than I expected, as did manufacturing, while services remained resilient relative to the biased surveys.
• The level of GDP is already 0.35% above the 4Q18 average, so I raise my forecast for 1Q19 by 0.1pp to 0.4% q-o-q. The BoE’s 0.2% forecast is looking woefully gloomy, although Brexit remains critical to the policy outlook.