China’s leaders cut their economic growth forecast for 2019 to 6% to 6.5%, compared with last year’s target of around 6.5%. At the annual National People’s Congress, Premier of the State Council Li Kiqiang warned that the country faced “a graver and more complicated environment” alongside a greater number of risks and challenges, and urged China’s population to prepare for “a tough struggle”.
- Chinese exports dropped sharply in February
- Consumer price inflation picked up in India
- Brazil’s central bank cut its economic forecast
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China’s leaders cut their economic growth forecast for 2019 to 6% to 6.5%, compared with last year’s target of around 6.5%. At the annual National People’s Congress, Premier of the State Council Li Kiqiang warned that the country faced “a graver and more complicated environment” alongside a greater number of risks and challenges, and urged China’s population to prepare for “a tough struggle”. China intends to increase spending, continue to open up access to its markets, and deliver almost 2 trillion yuan of tax cuts.
“China intends to … deliver almost 2 trillion yuan of tax cuts”
The unresolved trade dispute between the US and China continued to take its toll on trading activity. China’s exports dropped sharply in February, falling at an annualised rate of 20.7%, while imports declined by 5.2%. Investors were cheered, however, by evidence that China’s economic growth had picked up during the first quarter of 2019. According to the privately conducted China Beige Book survey, corporate borrowing posted a sharp increase over the period, reaching its highest level since mid-2013, although the cost of borrowing also increased. The Shanghai Composite Index rose by 5.1% in March.
In India, consumer price inflation rose by 2.57% year on year during February, having increased by 1.97% in January. In comparison, industrial production slackened during January, rising at an annualised rate of 1.7% compared with December’s rate of 2.4%. The news raised speculation that the Reserve Bank of India (RBI) would have increased scope to implement a cut in interest rates. During March, the CNX Nifty Index rose by 7.7%.
Brazil’s central bank – the Banco Central do Brasil – cut its forecast for economic growth this year from 2.4% to 2% in its March inflation report. Policymakers expect last year’s weakness to continue into 2019, dampened by slowing export activity and sluggish domestic demand. Exports are predicted to grow by 3.9%, compared with a previous forecast of 5.7%, undermined by a generally deteriorating global backdrop, a poor harvest, the impact of the Brumadinho dam disaster, and uncertainties surrounding the economic outlook for Argentina, which is an important trading partner for Brazil. The benchmark Selic rate has remained at a record low of 6.5% since March 2018. Looking ahead, policymakers intend to pursue an approach of “caution, serenity and perseverance” in their monetary policy stance. The Bovespa Index fell by 0.2% over March as a whole.
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