Chinese Q2 GDP Preview: Tepid growth to result in more support from PBoC

Economists' forecasts range from an annual contraction of around 3% to an expansion of around 4%. The consensus of 2.1% is, therefore, based on a wide array of opinions. A beat will be cheered while mediocre figures may weigh on the sentiment. In the unlikely case of horrible statistics, expectations for stimulus could turn positive for markets, FXStreet’s analyst Yohay Elam briefs. 

Key quotes

“After collapsing by 9.8% QoQ, the world's second-largest economy has probably grown by 9.6% in the second quarter, according to a Reuters poll. Is this quarterly comeback enough to put the country back to annual growth? After diving 6.8% yearly in the first quarter, the economic calendar is showing YoY of 2.1% in the second quarter.” 

“Stocks will likely cheer a robust GDP figure, despite suspicions about the veracity of the data. Slow growth would be disappointing, potentially sending shares in Shanghai and S&P 500 futures lower.”

“If Beijing shocks by reporting another quarter of annual contraction, markets may expect more stimulus and react in a counter-intuitive manner – rising on such stimulus hopes rather than falling.” 

“Industrial output figures will likely be the second thing to watch, with a more pronounced impact on the Australian dollar. While job figures from the land down under are published around the same time, Australia's No. 1 trading partner has an impact on the Aussie.”