China’s annual political centerpiece, the National People’s Congress gets under way this week, two months later than usual due to the pandemic.
The NPC, which is set to start on Friday, usually rubber stamps the government’s economic plans for the year, including the all-important gross domestic product target. That task has been thrown into doubt though as the government has considered not having a numerical goal at all as a result of the global uncertainty.
The meeting is also a chance for top leaders to respond to Donald Trump’s latest verbal assaults on China — though aimed at a domestic audience, what’s said here might not be definitive for the trade deal between the two states.
What Bloomberg’s Economists Say:
“Setting an explicit 2020 growth target would be a way to demonstrate confidence — but a risky one. A high target could be seen as unrealistic, given uncertainty over the course the pandemic will take and the potential for spillbacks from the global downturn. A low target would hurt confidence — potentially undermining the recovery. A qualitative target would strike a better balance between confidence and flexibility.”
–Bloomberg Economics’ Asia Team. For full PREVIEW, click here
This week also sees Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey testifying to lawmakers, and central banks in Turkey, Thailand and South Africa are predicted to cut rates again.
Click here for what happened last week and below is our wrap of what’s coming up in the world economy.
Fed Chair Powell takes the stage on Tuesday, testifying before Congress on the progress of the stimulus bill alongside Treasury Secretary Steven Mnuchin. That’s one day before the minutes of the April FOMC meeting are released.
On the data front, Thursday’s jobless claims report will again provide an update on whether the breakneck pace of layoffs is abating at all, while state-level employment numbers on Friday will show which places were hit hardest by the virus shutdowns. IHS Markit’s purchasing managers index could give a sign of whether economic deterioration eased a bit this month.
Europe, Middle East and Africa
With some European countries beginning to relax strict lockdowns in May, the first PMI readings will probably indicate that the economic damage wrought by the virus may be hitting a bottom. The figures, however, will show industries are still stuck in a deep recession.
U.K. unemployment data for April will offer some insight into the effectiveness of the government’s costly furlough program. Scheduled public appearances by a number of BOE officials will likely see them reiterate potential action to support the economy as early as June.
The European Central Bank will release the account of its last monetary policy meeting on Friday, potentially showing whether the Governing Council discussed increasing the size of the emergency bond-buying program. Officials including Philip Lane and Pablo Hernandez de Cos are scheduled to speak.
On Wednesday, Zambia’s central bank, facing inflation at a 43-month high and a currency that’s lost more than a fifth of its value, may talk about raising interest rates. In South Africa on Thursday, monetary policy makers will go the opposite direction and could cut for a fourth time this year. Turkey’s central bank also holds its rate meeting on Thursday, when it may lower its benchmark rate once again despite the recent weakening of the lira and investor concerns about negative real rates.
Japanese GDP data on Monday will confirm that the world’s third-largest economy is already in recession and heading for a deeper contraction this quarter. Inflation data at the end of the week could show nationwide prices started falling in April, adding to fears over a return to deflation.
Indonesia and Thailand have interest-rate decisions on Tuesday and Wednesday, with early economist surveys suggesting additional monetary stimulus is possible from both.
On Monday, Chile’s first-quarter GDP report will capture some of the pandemic’s impact while also showing improvement over 2019’s year-end contraction. Looking ahead, analysts in a monthly survey see a 7.2% decline in the second quarter, which still factors in fiscal stimulus equivalent to roughly 7% of economic output.
Chile Economic Growth
The pandemic and lockdowns to control it are throttling demand and consumer prices across Latin America, but perhaps no place more dramatically than Mexico, where data out Friday may show inflation holding near a level last seen during the Cold War.
Later Friday, Argentina and its bondholders face a 5 p.m. New York time deadline to agree on a $65 billion restructuring. If no deal is reached or the government fails to make a hefty interest payment, Argentina will default for the ninth time in 200 years.
— With assistance by Alaa Shahine, Malcolm Scott, Scott Lanman, Robert Jameson, Benjamin Harvey, and Alister Bull