Source: AFP
In contrast to 1Q23 when GDP rose strongly by 2.2% QoQ, China’s reopening in 2Q23 has lost momentum with the economy expanding less than expected by 0.8% QoQ and 6.3% YoY.
Source: Bank of Singapore, Bloomberg.
The post-pandemic recovery has slowed sharply as consumers have turned cautious again, firms lack confidence, the property sector has stayed subdued, and exports have contracted.
For example, purchasing manager indices (PMIs) - an important measure of business sentiment - reached a decade high of 58.2 in March for China’s service sector when this year’s reopening led to consumption rebounding strongly. However, in 2Q23, confidence has weakened again as the first chart shows.
Source: Bank of Singapore, Bloomberg.
Similarly, June’s activity data - also published today - shows consumption was lacklustre last month with retail sales only up 3.1% YoY. In addition, the second chart shows fixed asset investment only increased 3.8% YoY in June with investment in property still declining 7.9% YoY year-to-date.
Source: Bank of Singapore, Bloomberg.
Lastly, slowing consumption at home was also mirrored by weakness abroad. June’s exports contracted 12.4% YoY as the final chart shows.
For 2023, we expect China’s GDP to expand 5.4%, still up significantly from 3.0% in 2022 as last year’s strict lockdowns fade. However, for growth to reach our forecast, the authorities will need to provide further targeted fiscal support to boost consumption, investment and housing now.
Important information
This product may only be offered: (i) in Hong Kong, to qualified Private Banking Customers and Professional Investors (as defined under the Securities and Futures Ordinance); and (ii) in Singapore, to Accredited Investors (as defined under the Securities and Futures Act) and (iii) in the Dubai International Financial Center to Professional Clients (as defined under the Dubai Financial Services Authority rules) only. No other person should act on the contents of this document.This product may involve derivatives. Do NOT invest in it unless you fully understand and are willing to assume the risks associated with it. If you have any doubt, you should seek independent professional financial, tax and/or legal advice as you deem necessary.
Please carefully read and make sure that you understand all Risk Disclosures, Selling Restrictions, and Disclaimers. This document must be read together with the relevant Prospectus & Offering Documents &/or Key Fact Statement.
Disclaimer
This document is prepared by Bank of Singapore Limited (Co Reg. No.: 197700866R) (the “Bank”), is for information purposes only, and is not, by itself, intended for anyone other than the recipient. It may contain information proprietary to the Bank which may not be reproduced or redistributed in whole or in part without the Bank’s prior consent. It is not an offer or a solicitation to deal in any of the investment products referred to herein or to enter into any legal relations, nor an advice or by itself a recommendation with respect to such investment products. It does not have regard to the specific investment objectives, investment experience, financial situation and the particular needs of any recipient or customer. Customers should exercise caution in relation to any potential investment. Customers should independently evaluate each investment product and consider the suitability of such investment product, taking into account customer’s own specific investment objectives, investment experience, financial situation and/or particular needs. Customers will need to decide on their own as to whether or not the contents of this document are suitable for them. If a customer is in doubt about the contents of this document and/or the suitability of any investment products mentioned in this document for the customer, the customer should obtain independent financial, legal and/or tax advice from its professional advisers as necessary, before proceeding to make any investments.
The Bank, its Affiliates and their respective employees are not in the business of providing, and do not provide, tax, accounting or legal advice to any clients. The material contained herein is prepared for informational purposes and is not intended or written to be used, and cannot be used or relied upon for tax, accounting or legal advice. Any such client is responsible for consulting his/her own independent advisor as to the tax, accounting and legal consequences associated with his/her investments/transactions based on the client’s particular circumstances.
This document and other related documents have not been reviewed by, registered or lodged as a prospectus, information memorandum or profile statement with the Monetary Authority of Singapore nor any regulator in Hong Kong or elsewhere.
This document may not be published, circulated, reproduced or distributed in whole or in part to any other person without the Bank’s prior written consent. This document is not intended for distribution to, publication or use by any person in any jurisdiction outside Singapore, Hong Kong, or such other jurisdiction as the Bank may determine in its absolute discretion, where such distribution, publication or use would be contrary to applicable law or would subject the Bank and its related corporations, connected persons, associated persons and/or affiliates (collectively, “Affiliates”) to any registration, licensing or other requirements within such jurisdiction.
