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| HKECIC Weekly Market News |
| 11 March 2019 |
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| Market Snapshots |
| Asia and Australasia |
China: 2019 GDP growth target sets at 6-6.5%
China’s Premier Li Keqiang, in his annual Government Work Report, set China’s GDP growth target for 2019 in a range of 6% to 6.5%, compared to a growth target rate of around 6.5% for 2018. To support economic growth, the government will deepen the value-added tax (VAT) reform, reducing the rate in manufacturing and other industries from 16% to 13%, and lower the rate in the transportation, construction, and other industries from 10% to 9%. The reform is part of government’s measures to reduce tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan in 2019. Turning to the China-US relation, China will continue to push forward China-US trade negotiations, and added that the country is committed to mutually beneficial cooperation and aiming to settle trade disputes through discussions in an equal manner. |
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| Europe |
Eurozone: ECB slashes growth forecast
The European Central Bank (ECB) has lowered its Eurozone growth forecast for 2019 and 2020 to 1.1% and 1.6% respectively, from an earlier forecast of 1.7% for both years made in last December . The downward revision reflects the combination of global uncertainties including threats of an escalation of protectionist measures and the possibility of a no deal Brexit as well as adverse domestic factors in some Eurozone countries are likely to continue to weigh on activity. The ECB has also lowered its inflation forecast for this year to 1.2%, down 0.4 percentage points from its December’s prediction. Meanwhile, the ECB left the key interest rates unchanged and changed its forward guidance that rates will remain at their present levels at least through the end of 2019 (vs through the summer of 2019 as previously stated). |
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| North America |
US: Trade deficit surges to 10-year high
The US Department of Commerce reported that US’s goods and services deficit stood at US$59.8 billion in December 2018, the largest since 2008, as exports decreased for the third straight month while imports rebounded. For 2018, overall trade deficit surged 12.5% to US$621.0 billion, also the highest level since 2008 as both imports and exports rose to a record high. Exports jumped 6.3% to US$2.5 trillion as shipments of goods including crude oil, petroleum products and aircraft engines increased. Imports jumped at a faster rate at 7.5% to $3.1 trillion on purchases of items from pharmaceuticals, computers and computer accessories to electric apparatus. Separately, according to the Federal Reserve’s Beige Book published last week, economic activity in US continued to expand in late January and February, with ten regional districts reporting economic output expansion at a slight-to-moderate pace while the remaining two saw flat growth, amid government shutdown put a drag on growth in some sections including retail, auto sales, restaurant and manufacturing. |
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| Africa |
South Africa: Economic expands by 1.4% in Q4
South Africa’s economic growth eased to 1.4% qtr/qtr in Q4 2018 after a 2.6% growth in Q3, data from Statistics South Africa showed. This was the second consecutive quarter of growth after the recession in the first half of 2018. The growth was bolstered by the transport (+0.7%), manufacturing (+0.6%) and finance (+0.5%) sectors, while mining (-0.3%), trade (-0.1%) and government spending (-0.1%) contracted. The positive growth in the last two quarters has pushed overall growth for the year into positive territory, with real GDP growth rate coming at 0.8% in 2018, down from 1.4% in 2017. The central bank expects the economy to grow by 1.7% this year and 2% in 2020. |
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OECD: Global growth slowing as Europe weakens and risks persist
In its latest Interim Economic Outlook, the Organization for Economic Cooperation and Development (OECD) forecast that global growth would ease to 3.3% this year and 3.4% in 2020, further down 0.2 and 0.1 percentage points from its projection last November. The global expansion continues to lose momentum, amidst heightened policy uncertainty, persistent trade tensions and ongoing declines in business and consumer confidence. Global growth has been revised downwards with particularly large revisions in the Eurozone in both 2019 and 2020.
*Arrows indicate the direction of revisions since November 2018 |
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Diesel USA Inc., a US-based jeans maker and a unit of Italy’s Diesel SpA, has filed for Chapter 11 bankruptcy protection. The company attributed the filing to the general downturn in the brick-and-mortar retail industry, expensive long-term leases for certain retail locations as well as multiple incidents of theft and fraud. A court filing showed that the company has formulated a reorganization business plan which will require investment of approximately US$36 million over the three-year period. |
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Hong Kong Export Credit Insurance Corporation
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Copyright © 2019 Hong Kong Export Credit Insurance Corporation |
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Disclaimer
The information contained in the ‘Weekly Market News’ (WMN) is compiled by the Hong Kong Export Credit Insurance Corporation ("HKECIC") for general information only. Whilst HKECIC endeavours to ensure the accuracy of this general information, no statement, representation, warranty or guarantee, express or implied, is given as to its accuracy or appropriateness for use in any particular circumstances.
HKECIC is not responsible for any loss or damage whatsoever arising out of or in connection with any information including data or programmes on the WMN. HKECIC reserves the right to omit, suspend or edit all information compiled by HKECIC on the WMN at any time in its absolute discretion without giving any reason or prior notice. Users are responsible for making their own assessment of all information contained in this WMN and are advised to verify such information and obtain independent advice before acting upon it.
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