ANZ tips cyclical momentum for China in Year of the Tiger

January 17, 2022

SINGAPORE -- China's economic weakness (Q4 2021 GDP: 4.0% y/y) will likely continue in Q1 this year due largely to ongoing virus containment measures, according to ANZ Bank.

"However, 2022 will likely see a change in cyclical momentum (and) we have revised our full year GDP forecast upward to 5.0% from previously 4.6%," ANZ says.

"We note that the intensity of China's counter-cyclical supports has increased, and economic indicators will likely improve in response to the stimulus. As growth is stabilised, policymakers may change their tone and signal a taper at the Politburo meeting in July."

ANZ says that, against the backdrop of the US Fed's rate hike cycle, Chinese policymakers may temper their monetary policy easing to mitigate the risk of massive capital outflows and to maintain currency stability in a crucial political year (the 20th Party Congress). (ATI).