China is targeting real GDP growth of 5% this year, roughly on pace with its performance in 2023. However, achieving that pace of growth is likely to be a challenge as China’s economy won’t have the reopening benefit that it did in 2023 and so far the government has been reluctant to announce wide-scale stimulus to support growth. Prime minister Li Qiang said “it is not easy” for China to reach the targeted growth rates in 2024 and that “policy support and joint efforts from all front” were needed. Consensus projections and the IMF are for China to record sub-5% growth for the first time in a non-pandemic impacted year for the first time since 1990.
The China Caixin non-manufacturing PMI for February decelerated to 52.5 from 52.7 a month earlier. The composite PMI held unchanged at 52.5. In the services index, employment fell below the 50 level while prices charged rose to their highest level since May 2023.
Headline Turkish CPI inflation accelerated to 67.1% y/y in February, up from 64.9% in January and higher than the predicted 66.0%. This marked the fastest pace of annual price growth since November 2022 and will likely keep a hawkish bias in play from the central bank. In its communiqué from its February MPC meeting, the TCMB highlighted food prices as one factor keeping ‘inflation pressures alive’ and food and non-alcoholic beverage prices rose 71.2% y/y last month. Monthly inflation did slow from the 6.7% recorded the previous month, but at 4.5% it was still higher than the consensus projection of 3.9%. Annual core inflation was 72.9%, up from 70.5% in January.
Raphael Bostic, president of the Atlanta Fed, said he expected just one rate cut of 25bps in Q3 before the Fed paused to assess how the economy was developing. Bostic warned of “pent-up exuberance” on the part of US firms that could ramp up spending once rates are cut and noted that US companies remained optimistic. Bostic’s comments were among the most clearly hawkish of Fed speakers and diverge from the summary of economic projections which had three 25bps cuts pencilled in for 2024.
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