Pantheon Macroeconomics

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Key Issues

1 Apr 2022 A Sharp Slowdown for China in March, but No New Stimulus, Yet

China's economy is groaning under the strain of increasingly restrictive zero-Covid policies. Factory closures and lockdowns took a heavy toll on both manufacturing and services in March. Policymakers are relying on the existing toolkit, deployed more rapidly, for now.

Craig BothamChina+

29 Mar 2022 Weaker Chinese Profit Growth Heightens Political Risks

Chinese industry faces rising costs, both from global markets and domestic Covid policies... ...Coupled with weaker demand, this implies that profitability will be under heavy pressure this year. Policy efforts to support China's struggling firms will likely raise tensions with trading partners.

Craig BothamChina+

25 Mar 2022 Japanese PMIs Add to Evidence of a Slowdown in Global Trade

We think Japan's flash manufacturing PMI was mostly bad news, despite a bounce in the headline. Forward-looking components turned south, and we expect the final print, and next month's, to be softer. A drop in new export orders is another signal that global trade is struggling amid renewed shocks.

Craig BothamChina+

22 Mar 2022 Korean Exports Falter as Demand and Supply Issues Bite

Preliminary trade data from Korea point to a loss of momentum for global trade in March. War and Covid have tightened some bottlenecks, but demand is also under pressure from oil prices. The PBoC again opted not to ramp up monetary easing, despite recent messaging from Beijing.

Craig BothamChina+

17 Mar 2022 Japanese Export Momentum Wanes, as Global Problems Mount

Japanese exports bounced back in February, as holiday effects reversed, but should fade from here. Challenges are growing for both demand and supply, with no clear resolution in sight for either. China's property market shows no sign of recovery, and policymakers are getting nervous.

Craig BothamChina+

16 Mar 2022 Stronger than Expected, but for How Long, as Headwinds Build

China's state sector led a rebound in economic growth in early 2022, as investment surged. Data is always noisy at this time of year, however, and the surge is driven by frontloading spending. Growth will likely slow by April, given soaring Covid cases and base effects, prompting more easing.

Craig BothamChina+

10 Mar 2022 Chinese Inflation Approaches a Nadir, but It's Complicated

Energy and food are set to drive Chinese inflation dynamics, but base effects will play a big part. Global commodity prices are surging, but the link to domestic consumer prices is modest. The PBoC will stay dovish, and may ease more ag- gressively, due to--not in spite of--the cost shock.

Craig BothamChina+

8 Mar 2022 China's 2022 Work Report, Road Map or Wish-List

Slower export growth provides a taster of the challenges facing China's economy in 2022. The Work Report--a government scorecard and road map--suggests a reliance on infrastructure... ...but convincing local governments and banks to do their part is going to be difficult, and risky.

Craig BothamChina+

4 Mar 2022 No End Yet to Zero-Covid, Despite Viral Fatigue for Chinese Services

Press headlines around the end of China's zero- Covid stance have generated great excitement... ...But in reality, the policy shift looks as distant as ever, even if clarity is to be welcomed. Services will face persistent headwinds this year, boosting reliance on state support for growth.

Craig BothamChina+

3 Mar 2022 Another Unwelcome Supply Side Shock for Global Trade

Regional PMIs show cost pressures were already rising on the eve of Russia's invasion of Ukraine. The behaviour of oil and other commodity prices signals further increases to come. We expect these cost increases to be passed on to consumers, amidst strong external demand.

Craig BothamChina+

2 Mar 2022 Winter's Chill Starts to Fade in China, but Spring Isn't Here Yet

China's activity surveys were better than expected in February, and a touch of optimism is warranted... ...but should be freighted with caution, given holiday effects, and evidence that demand is still soft. Policy stimulus is feeding through, but stability is the watchword, not explosive growth.

Craig BothamChina+

24 Feb 2022 Ukraine, Energy Prices a Bigger Worry than Awkwardness for China

Russia's invasion of Ukraine puts China in a tricky position diplomatically, but it won't mind too much... ...What matters more to China is the impact on energy prices, at a time of softening growth. Announcements signal more support from the centre, but bang-for-buck will be lower than usual.

Craig BothamChina+

22 Feb 2022 A Winter Chill in East Asia in Early February, but a Thaw is Coming

Korean exports had a slow start to February, chiefly because of holidays in Korea and China. Japanese manufacturing similarly looks soft at the moment, but should recover almost fully in March. Little sign of supply chain improvements so far, but a reopening is underway in China.

Craig BothamChina+

18 Feb 2022 China Weighs on Japanese Exports, but Weakness is Overstated

Japanese export growth slowed unexpectedly in January, but it's not as bad as it looks... ..factory closures in China, thanks to holidays, pollution, and Covid, explain much of the weakness. We remain positive on the global demand backdrop for exports, but supply congestion is rising.

Craig BothamChina+

17 Feb 2022 Pigs Might Fly, but they Bring Lower Inflation in their Wake

Chinese inflation continued its decline in January, thanks to base effects and weak demand. The main constraint on PBoC action is worries over financial stability, not inflation. China should export disinflation in 2022, a soothing balm for policymakers outside China.

Craig BothamChina+

16 Feb 2022 Japan Returns to Growth, but the Bumpy Ride isn't Over

Japanese GDP growth returned to positive territory in Q4, thanks to a rebound in consumption. Consumption will be under pressure in Q1, thanks to Omicron, but investment should recover. Chinese stimulus remains very modest, illustrated by a net withdrawal of liquidity this month.

Craig BothamChina+

11 Feb 2022 The State Sector Doubles Down as Risk Appetite Dwindles

Record weakness in Chinese M1 growth is only partly attributable to seasonal and base effects... ...Weaker risk appetite, and softer economic activity, underlie the drop in liquid deposits. Credit growth continued to become more heavily dominated by the state in January.

Craig BothamChina+

10 Feb 2022 Regional Manufacturing Faces a Drag from China

Regional manufacturing PMIs have diverged in recent months, thanks to Chinese factory closures. Japan and Korea likely will converge towards China, but should be cushioned by external demand. China's employment situation is getting worse, but policymakers are staying the course, for now.

Craig BothamChina+

4 Feb 2022 Korean PMIs Lend Further Support to Strong External Demand Picture

Korea's manufacturing sector is having a happy new year, despite Omicron outbreaks. The PMI survey provides encouraging signs for global demand, with new export orders bouncing... ...It also points to an easing of some bottlenecks, with more to come as stockpiling fades.

Craig BothamChina+

2 Feb 2022 Korean Exports are Doing Better than the Data Suggest

Korean exports indicate continued strong external demand, despite the January slowdown. Holiday distortions and base effects weigh on the year-over-year number. Bottlenecks, and Chinese factory closures, are the main risks to the outlook.

Craig BothamChina+

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