China: April IP recovery beats market expectations – Standard Chartered

China’s IP growth rebounded quickly to 3.9% y/y in April. Economists at Standard Chartered Bank maintain the Chinese Q2 GDP growth forecast of 3% y/y, and see further monetary easing by PBoC in Q2-Q3.

Key quotes

“The industrial sector continued to lead China’s recovery in April, with industrial production (IP) rising 3.9% y/y (Figure 1), beating the consensus growth estimate of 1.5%.”

“Services production and retail sales continued to decline in April, but the pace eased to -4.5% y/y and -7.5% y/y, respectively.

“We maintain our baseline GDP growth forecasts of 3% y/y for Q2 and average 2.5% for 2020.”

“We expect the People’s Bank of China (PBoC) to deliver another broad-based 30bps cut in the reserve requirement ratio (RRR) in Q2 and a 50bps cut in Q3, a 25bps cut in the benchmark deposit rate in Q2, and another 10bps cut in the medium-term lending facility (MLF) rate in Q3.”