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Macro-economic outlook in 2019
!!Zhang Zuohao, Senior Macroeconomics Analyst from Horizon Insights

2018-11-09 10:35:09

The report on macro-economic outlook is divided into four parts. 

Firstly, domestic economic growth pressures intensify. Real estate sales growth will move further down to negative range next year. The strength of new construction of real estate may continue for another quarter, supporting high prices of industrial products, but it may fall sharply from Q1 next year. Local government bond issuance is accelerated, but it may not bring about infrastructure improvement. It is a better leading indicator to observe when the number of PPP projects rebound. 

Secondly, inflation rises mildly. The impact on CPI mainly manifests in transportation, but oil price has probably already seen the highest y-o-y growth. The trend of rent is erratic, and if the rent tracks the rise in third and fourth-tier cities, pressure on CPI will increase sharply. CPI is probably to increase gradually y-o-y, and it is too early to talk about "stagflation". 

Thirdly, international situation is still complicated. The integer level still to be held throughout the year, but the basket of exchange rates will remain weak in the context of further intensified trade war conflicts. The US economy is approaching its peak and dramatic change might be seen in mid 2019. 

Lastly, Mr. Zhang talks about asset price judgment. Possible sharp fall of real estate operation may lead to collapse of demand for industrial products in 2019. The peak of global economic cycle will also significantly suppress non-ferrous metals, and crude oil may be relatively strong. 

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