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Commerzbank Weigh In On The Growth Outlook

CHINA

In the wake of today’s Chinese GDP and economic activity data Commerzbank note that the releases “clearly affirm the fact that this year’s growth target of 5.5% is unattainable. Yes, the economic re-opening should see a continued improvement in domestic spending. And will the government loosen the purse strings and provide more stimulus? Yes, they have already began to do so. However, it will be a cautious and targeted stimulus program, just enough to keep the economy going and to prevent a surge in unemployment. Rather than sticking obstinately to a GDP growth target, the government is seemingly taking a pragmatic approach with the aim to ensure adequate job growth. The reason for this reticence on policy stimulus remains the focus on restructuring and deleveraging, the ongoing shift to a more sustainable growth model. As such, we should not hold our breath for a massive stimulus program from China to lift global exports. A repeat of 2008 is unlikely to happen. Stability remains the key ahead of the 20th Party Congress in October.”

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In the wake of today’s Chinese GDP and economic activity data Commerzbank note that the releases “clearly affirm the fact that this year’s growth target of 5.5% is unattainable. Yes, the economic re-opening should see a continued improvement in domestic spending. And will the government loosen the purse strings and provide more stimulus? Yes, they have already began to do so. However, it will be a cautious and targeted stimulus program, just enough to keep the economy going and to prevent a surge in unemployment. Rather than sticking obstinately to a GDP growth target, the government is seemingly taking a pragmatic approach with the aim to ensure adequate job growth. The reason for this reticence on policy stimulus remains the focus on restructuring and deleveraging, the ongoing shift to a more sustainable growth model. As such, we should not hold our breath for a massive stimulus program from China to lift global exports. A repeat of 2008 is unlikely to happen. Stability remains the key ahead of the 20th Party Congress in October.”