JP Morgan global market strategist Marcella Chow says new renminbi loans and total social financing have strengthened off the back of “continued” mortgage loan demand.
“The overall strength of economic data in June means policymakers will likely refrain from ramping up policy easing. However, it is still too early to worry about tightening, especially as inflation remains steady,” she said.
Ms Chow said consumption as a contribution to GDP grew to 73.4 per cent in the first half of 2016, up from 59.9 per cent in 2015, pointing to “further progress in economic rebalancing”.
Nevertheless, she cautioned that GDP growth is likely to “ease modestly” in the second half of the year as the impact of earlier stimulus fade, with immediate easing policy unlikely.
“Looking ahead, we are conscious that the momentum in consumption growth may not be enough to fully offset the ongoing deterioration in private and manufacturing investment, amid the drag from the adjustment in overcapacity sectors.”
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