China: Growth downgraded – Standard Chartered

Economists at Standard Chartered Bank have updated their Chinese growth forecast cutting it though they expect a recovery in Q2 as coronavirus will be contained by March. USD/CNY is sitting at 6.989.

Key quotes

 “We cut our 2020 growth forecast to 5.5% from 5.8% to reflect a longer delay in production.”

“The government may set its 2020 growth target at around 6%, while allowing flexibility in measuring growth performance. Fiscal support may be substantial, with aggressive budget implementation and a greater focus on infrastructure spending.”

“Our core scenario is that coronavirus will be contained by late March, paving the way for a Q2 recovery.”

“If the epidemic is not contained by end-March as our base case assumes, the central bank may consider cutting the benchmark deposit rate.”