eco TV Week


China: new economic slowdown, new rise in credit risks   5/20/2022

In China, economic activity contracted in April and the short-term economic outlook remains uncertain. In this complicated environment, how is credit risk evolving?

Wage-price loop: low risk but one to watch   5/13/2022
One of the economics themes currently being debated, the possible start of a wage-price loop is a cause for concern. However, at first and under normal conditions (which, it is true, is not the case right now), a wage-price loop is not a problem in itself.

The complex relationship between financial conditions, nominal and real interest rates   5/6/2022
Financial conditions reflect whether monetary policy acts as a support to growth or as a headwind. They can be assessed by looking at the level of short and long-term interest rates, corporate bond spreads, the exchange rate. Sometimes equity markets and bank lending survey data are also taken into account.

France: Supply-side constraints and inflation are weighing on growth   4/29/2022
GDP growth should decrease markedly in France during 22H1, as a result of supply-side constraints (weighing mainly on the car and construction sectors). Purchasing power losses add to these constraints and should have their wider impact on sectors affected by the strongest price increases, such as energy and food. Growth should recover from Q3, as income growth should accelerate and improve household’s purchasing power.

From one crisis to another, how does Europe respond?   4/22/2022
As a result of the war in Ukraine, the energy shock experienced in Europe is questioning the economic recovery. It also highlights the urgent need for a transition to carbon neutrality.

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On the Same Theme

Economic contraction 5/23/2022
China’s economic growth started to slow down in March, then activity contracted in April (industrial production: -2.9% year-on-year, services production: -6.1% y/y). This rapid deterioration has principally resulted from mobility restrictions implemented in various provinces of the country in response to the epidemic wave. Most importantly, stringent lockdowns have been imposed in some major industrial and port regions (notably Shanghai), which has dampened activity in manufacturing factories, disturbed transport of goods and leading to supply chain disruptions in many sectors. Overall, the health situation and the level of mobility restrictions in China are improving in May. Local economic activity may therefore be able to recover at least slightly.
Abrupt economic growth slowdown in China 5/19/2022
China’s economic growth strengthened slightly in the first two months of 2022, but the rebound was cut short in March.
Chinese exports: a major growth slowdown is expected 5/4/2022
After an extremely solid performance in 2020 and 2021, export growth will slow steeply in 2022. Export growth rates have already been normalising in recent months, and the slowdown is expected to deepen in Q2 2022. This is the consequence of supply-side constraints due to disruptions in factories, supply-chain difficulties in the manufacturing sector and problems with goods transport following lockdowns in several main industrial and port regions (notably Shanghai). Exports to other Asian countries (47% of China’s total exports) were the first to be hit by China’s logistics problems and slowed markedly in March. On the demand side, the outlook has been worsening since the beginning of the war in Ukraine. In its April World Economic Outlook, the IMF further downgraded its forecast for world economic growth in 2022, to 3.6% (down from 6.1% in 2021) and for world trade growth to 5% (from 10.1% in 2021). The slowdown in China’s export growth and the expected deterioration in its trade and current account surpluses (all the more so as its import bill is hit by rising commodity prices) – coupled with the effects of the growing divergence between monetary policies of People’s Bank of China and the US Fed – contributed to the sudden depreciation (of around 4%) of the yuan against the US dollar in April.
In lockdown 4/25/2022
China’s economic growth reached 4.8% year-on-year (y/y) in Q1 2022. It improved slightly over the first two months of the year, both in industry and in services, but this recovery was cut short in March. Economic conditions have worsened rapidly, as our barometer shows (narrowing of the blue area relative to the dotted area). This deterioration has resulted primarily from the resurgence of Covid-19 and mobility restrictions imposed in a number of regions in the country. In addition, short-term growth prospects are also looking bleaker due to deterioration in the international climate triggered by the war in Ukraine.
New disruptions 4/15/2022
After a strong start in 2022, China’s economic growth slowed in March. Headwinds are expected to persist in the very short term. Firstly, the rapid surge in the number of Covid-19 cases has led many regions to impose severe mobility restrictions. Secondly, the property market correction continues. Thirdly, producers and exporters will be affected by the impact of the war in Ukraine on commodity prices and world trade. The Chinese authorities are bound to accelerate the easing of economic policy.
A strong start to the year  3/21/2022
Economic growth picked up in the first two months of 2022, but this improvement will probably halt in March.In the services sector, growth was 4.2% year-on-year (y/y) in January-February, which is low, yet this figure is higher than the 3.3% reported in Q4 2021. The same observation can be made for retail sales volumes, which rose 4.9% y/y in January-February, up from less than 2% in Q4 2021.
Monetary easing underway 1/23/2022
Chinese economic growth slowed to 4% year-on-year in Q4 2021 from 4.9% in Q3. In the industrial sector, the situation improved slightly in Q4 after a summer that was badly disrupted by power cuts and supply-chain problems. Industrial growth accelerated from 3.1% y/y in September to 4.3% in December, driven by the still strong performance of exports (up 22.9% y/y in Q4). In the immediate future, however, manufacturing output and exports are likely to suffer from repercussions arising from the latest wave of the pandemic.
Private consumption still lacks traction 12/19/2021
Economic figures for November once again show the dynamic momentum of Chinese exports (+21.4% year-on-year in current dollars), which continues to drive production and investment in the manufacturing sector. Our barometer highlights a deteriorated industrial performance in September-November 2021 compared to the previous 3-month period. Yet the industrial situation has been picking up slowly since October, after major disruptions in September due to power outages and supply chain disruptions. Industrial production rose 3.8% y/y, compared to 3.5% in October. 

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