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China’s Economy Slowest Since Financial Crisis


Chinese economic data  missed expectations.

Christopher-LemieuxSMBullion.Directory precious metals analysis 14 April, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Senior FX and Commodities Analyst at FX Analytics

The Shanghai Composite fell just over one percent, following a slew of economic data out of China falling below expectations. Growth expansion fell to seven percent in the first quarter and met general consensus. However, it contracted from the previous quarter’s 7.3 percent print.

Although many may worry that the world’s growth engine is beginning to slowdown, analysts foresee the slowdown as just another data point to invoke more stimulus out of the People’s Bank of China (PBOC). This was the slowest quarter of growth since the height of the financial crisis were China only grew 6.6 percent.

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Industrial output showed growth of 5.6 percent in March, far below economist predictions of 10.9 percent. Retail sales grew 10.2 percent, narrowly missing the 10.9 percent.

The Chinese yuan has been strengthening against the dollar of late, and that is not particularly helpful as the second-largest economy moves closer to deflationary territory. The producer price index (PPI) has been stagnating in deflationary territory for a few years with the GDP deflator now moving into negative territory.

Consumer prices will soon follow.

Data Provided by Bloomberg; Chart posted by Tom Orlik

Data Provided by Bloomberg; Chart posted by Tom Orlik

It is expected that the People’s Bank of China will likely follow major central banks with more easing.

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