Iris Pang, Economist – Greater China at ING Bank revised lower her 2019 price-forecast for the Chinese Yuan.
Key Quotes:
“The government requests a pool of future infrastructure projects. This means the government is prepared to dig in for a longer-term fight in the trade war with the US. This also implies that the Chinese government might depend on investment to support the economy for a longer time.
Our GDP forecasts are still intact as we consider the government’s fiscal stimulus sufficient to provide support as trade tension escalates. We project GDP growth at 6.3%YoY in 4Q18, 6.2%YoY in 1H19, and 6.3%YoY in 2H19.
But we do expect USDCNY to continue to weaken if the trade war continues. We are keeping our forecast of USDCNY and USDCNH at 7.0 by end of 2018, but have weakened the Yuan pairs to 7.30 by end of 2019 (previously at 6.50).”
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