The Chinese economy is slowing down. The lower than expected growth quarter over quarter is no surprise after China fell behind government forecasts. The change of tone from politicians has helped the market not to overreact to lower than 7% growth. A “new normal” is to be expected from an economy than enjoyed such a sustained period of double digit growth. The forecast for the first quarter growth of China’s economy is 7.0%. The sometimes pessimistic tone of Chinese politicians have made forecasters underestimate growth consistently. Case in point last month’s forecast of 7.2% was narrowly beat by a 7.3% figure. The market rewarded the better than expected growth figure with stock market gains.
Commodity currencies will be closely following this release as they could get a boost from a higher than forecasted GDP that in turn could hint at a higher demand from the Asian economy.