BOC Research Institute released the 2022Q2 Economic and Financial Outlook (the “Report”) in Beijing on March 30, 2022. The Report reviews the global and China’s economic and financial performance as well as the global banking performance in 2022Q1. It also provides an outlook on the economic and financial situations and the global banking trends in 2022Q2.
With regard to the global economic and financial situation, the Report notes that affected by the protracted pandemic and the Russia-Ukraine conflict among other factors, the global supply and demand imbalances worsened, trade in goods slowed down, and the inflation was significantly increased, resulting in a slowing economic recovery in 2022Q1. The global financial markets fluctuated greatly, along with a more volatile US Dollar Index, major stock markets fluctuating downward, and the prices of commodities hitting new record highs. Looking into 2022Q2, global inflation will continue to climb, and the economic growth might accelerate due to low base effect. Tightening monetary policies of major economies will speed up a narrowing liquidity and increase the costs of aggregate financing, curbing investment and consumption in turn. Therefore, the global economy will face higher risk of stagnation, and the financial markets will continue the fluctuation. The Report also provides a special analysis of hot issues such as risks faced by emerging economies currently, and the coming era of comprehensive financial regulation.
With regard to China’s economic and financial situation, the Report notes that China’s economy surged in the first two months of 2022, with major economic indicators better than expected, which is a manifestation of policies of ensuring stable growth. However, the economy has begun to face more problems and challenges since March. The Q1 GDP growth is expected to be around 5.2%. Looking into 2022Q2, three key factors including external impact, pandemic dynamics and policies of ensuring stable growth should be the focuses. Based on the primary judgment, the pandemic and the sluggish income increase will hinder the consumption recovery, along with slowing real estate investments and export growth. However, given more efforts will be made from the policy level to ensure stable growth, the market expectation will be stabilized, the infrastructure and manufacturing investments are expected to grow at a faster pace, and the high-tech industries will maintain a high growth rate, which is conducive to the overall stability of economic growth. The Q2 GDP growth is expected to be around 5.1%, 0.1 percentage point slower than that of Q1. Macro policies should pay close attention to the changes of internal and external environments. Risk contingency planning and risk prevention should be prepared. Efforts should be made to implement various policies and arrangements and strive to stable macroeconomic performance.
With regard to global banking developments, the Report notes that in the first half of 2022, despite a slowing down global economy, the banking business maintained a solid and sound development on the whole, yet faced new risks arising from increasing uncertainty in global economic growth, more volatile financial markets and so on. As new drivers to China’s economy were emerging, the banking industry accelerated the transformation while serving the real economy, and recorded a medium-high rate of growth, with profit growth back to normal and asset quality enhanced steadily. The 2022 Report on the Work of the Government of China made it clear that the main task of financial services is to “encourage the financial sector to provide more effective support to the real economy”, clarifying the focuses of corporate credit granting and the direction of corporate business transformation. The development of technological finance, green finance, supply chain finance and investment banking has a great prospect.
