Week Ahead: Focus on China GDP and U.S. Retail Sales, More CPI Data on Tap

 | Jul 14, 2023 08:51AM ET

Inflation data will continue to dominate the economic agenda in the coming week, although the spotlight will probably fall on Chinese GDP figures as well as US retail sales. The countries reporting CPI numbers include Canada, New Zealand, Japan and the United Kingdom. With inflation seemingly coming under control in America, investors will be on the lookout for any divergence in other countries’ progress. However, sentiment will likely be shaped by growth indicators from the world’s two largest economies as both desperately try to avoid a recession.


Chinese GDP rebound could mask cracks below the surface


China is rarely out of the headlines these days amid persisting fears that the economic recovery is faltering and doubts about how far the government is willing to go to pump more stimulus. On Monday, when the second quarter GDP estimate is reported, investors will likely breathe a sigh of relief, at least initially.

The economy is expected to have expanded by 7.3% year-on-year, which would make it the fastest growth since the second quarter of 2021. However, GDP shrank in the same quarter of 2022 so this would flatter the annual comparison. Moreover, on a quarterly basis, growth is projected at just 0.5%, which is below China’s average and well below the pace that is needed to achieve yearly growth of around 5% that the government is aiming for.

The inflation releases will wrap up on Friday in Japan where speculation is growing about a possible tweak in policy by the Bank of Japan. Friday’s data could be important in helping policymakers make up their minds if they should lift or remove the upper limit on the 10-year JGB yield.

Headline and core CPI appear to have plateaued in Japan but the so-called ‘core core’ rate continues to climb. Thus, any upside surprises in the June figures could fuel speculation of a July move, boosting the Japanese yen, which is having its best week since November last year.

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