18 January 2013: China grew 7,9% in 2012

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The Chinese economy grew 7,9 percent in the fourth quarter of 2012 rebounding after seven straight slowdown quarters. An uncertain global outlook reflected in the World Bank’s forecast for 2013 reducing global growth from 3 to 2,4 percent, might, however, mean that Chinese authorities would have to undertake strong stimulus in 2013. 7,9% is up from 7,4% in the third quarter, the lowest since the financial crisis started in the end of 2008. 2012 is the weakest year in Chinese economy since 1999. The presented numbers are slightly stronger than market expectations.

Analysts were pleased with the numbers. The momentum at the end of 2012 is fairly strong, but the rebound in Chinese economy is not astonishing, BNP Paribas stated. Data for industrial output in December saw a growth of 10,3% while 10, 1% was expected. Retail sales in December rose 15,2% demonstrating a strong growth in domestic consumption. This indicates that the Chinese government is succeeding in turning the economy from export to domestic consumption. China’s target for annual growth was 7,5% in 2012. That is lower than the 8% goal set for the previous eight years. The GDP growth target will be 7,5% in 2013. To encourage growth China has increased infrastructure investments and encouraged energy-saving measures for consumers.

Asian stocks rose on the Chinese data cementing positive market sentiment after presentation of strong US labor and housing mark reports yesterday. Dow Jones increased 0,63% and Nasdaq jumped 0,59. Intel, Home Depot and Walt Disney were among the winners. The Asian Pacific index, MSCI, rose 0,5%. Shares also rose in Hong Kong and Shanghai. The better market sentiment strengthened riskier assets and currencies. Euro/USD has gained 100 basis points since yesterday morning trading at 1.3382 close to the 1.2404 peak seen a week ago.

Euro and USD posted new highs against the Japanese Yen which after two days rebound earlier in the week continues down. Yen passed the critical 90 yen level in relation to USD. Expectation of monetary easing has put the yen under strong pressure over the last two months. Bank of Japan (BOJ) will probably next week announce removal of the 0,1% floor on short-term interest rates and commit itself to open-ended asset buying with a 2% inflation target as demanded by the new Prime Minister Abe.

The Chinese and better than expected US jobless claims and housing data have strengthened commodities and the appetite for risk. New York crude, NYMEX, rose stronger than Brent crude yesterday. Brent futures have recovered and trade again with the interval between USD 111 and 112 a barrel. Precious metals like Gold and silver jumped yesterday.

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