forex

China: Coronavirus to hit significantly Q1 GDP – Wells Fargo

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Analysts at Wells Fargo, now expect a significant hit to China’s Q1 GDP on the outbreak of the coronavirus.

Key Quotes: 

“In addition to physical measures to contain the outbreak, Chinese authorities have also taken financial measures to support the economy, including lowering interbank interest rates and adding liquidity to money markets.”

“We now expect GDP growth of just 5.1% year-over-year in Q1-2020, down from our previous forecast of 5.9% year-over-year. In sequential terms, that would equate to growth 0.5% quarter-over-quarter in Q1-2020, a sharp slowdown from the 1.5% quarter-over-quarter gain seen in Q4-2019. Over time and as the outbreak runs its course and policy measures offer some support to the economy, there should be some recovery in growth. Overall, we now forecast 2020 GDP growth of 5.5% (compared to 5.9% in mid-January), while we forecast 2021 GDP growth of 6.1% (compared to 5.9% in mid-January).”

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