Danske Bank: It Remains Uncertain Whether China Will Provide Enough Stimulus for a Domestic Recovery

Forexl - Allan Von Mehren from Danske Bank stated that the message from China's CEWC does not provide much new information and leads to the usual market model of "buy on rumors, sell on facts (or disappointments)." However, Von Mehren noted that the overall market reaction has been very limited, adding that "it is still uncertain whether China will provide enough stimulus to ensure a domestic recovery." Nevertheless, the economist believes that China has sent a strong policy signal to boost domestic demand, including consumption, by promising to better balance supply and demand by 2025. Von Mehren expects China to take sufficient measures to achieve close to 5% growth in 2025, forecasting a growth rate of 4.7%, slightly above the 4.5% consensus. Von Mehren also added, "Of course, this will depend on the intensity of the upcoming trade war with the U.S."