In today’s briefing:
- Regional Economics: Episodic Stresses, Not Prolonged Crises for Asia in 2024
- China Will Increase Government Spending to Bolster Economy
- EA: Inflation Springs as Energy Fades
- Part Six: Commodities: Priced for a Downturn
- CX Daily: China’s Cash-Strapped Local Governments Struggle to Revive Land Sales
Regional Economics: Episodic Stresses, Not Prolonged Crises for Asia in 2024
- While there will be economic and geopolitical shocks, we believe that these will cause episodic stresses, not lasting damage to the region’s growth or stability.
- Monetary policy, China’s economic performance, and geopolitical conflict will shape the economic outlook for the region, while government policy responses may provide economic upsides.
- Thus, we think that the Asia-Pacific region will exhibit commendable economic resilience and modestly improved growth compared to 2023.
China Will Increase Government Spending to Bolster Economy
- China will expand government spending in 2024 through a combination of policy tools, Lan Foan, the country’s newly appointed finance minister, said as Beijing steps up efforts to stimulate domestic demand and shore up the economy.
- The government will strengthen the overall coordination of fiscal resources, utilizing a combination of special bonds, national bonds, and other policy tools such as tax incentives and fiscal subsidies to moderately expand the scale of fiscal spending, Lan said in an interview published Thursday by official newspaper People’s Daily.
- In 2024, the government will maintain a proactive fiscal policy with an appropriate level of fiscal spending increase to send positive signals, said Lan.
EA: Inflation Springs as Energy Fades
- EA inflation undershot expectations for the fourth consecutive month but smashed the downtrend with a 0.5pp rise to 2.9% for Dec-23.
- The run of downward surprises means Dec-23 inflation is 0.8pp lower than expected in Oct-23. However, it is close to expectations a year earlier.
- Fading energy price disinflation drove the upside move in a timely reminder that all the EA’s other special aggregates remain well above 2%, discouraging ECB rate cuts.
Part Six: Commodities: Priced for a Downturn
- The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
- Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
- Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.
CX Daily: China’s Cash-Strapped Local Governments Struggle to Revive Land Sales
- Land / In Depth: China’s cash-strapped local governments struggle to revive land sales
PMI /: China services activity picks up, Caixin PMI shows
Funds /: New China Life sets up $1.4 billion fund for property investments
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