China: Trade data suggests improvement in domestic demand - Nomura

Research Team at Nomura, suggests that their forecast of a gradual Chinese slowdown remains intact.

Key Quotes

• “Export growth surged to 11.5% y-o-y in March from -25.4% in February, largely due to a low base last year; we do not view this as a sign of a significant improvement in external demand.

• More notably, import growth rose to -7.6% y-o-y from -13.8%, led by ordinary imports, which suggests an improvement in domestic demand.

• We see some upside risk to our Q1 GDP growth forecast of 6.6% y-o-y but maintain our 6.2% GDP growth forecast for the full year as severe structural problems in the economy remain and as the financial sector normalises.

• We continue to expect accommodative fiscal and monetary policy, with quasi-fiscal easing playing an important role.”