China's Q1 GDP growth to fall to 7%

In light of the modest improvement in the two manufacturing PMI reports, industrial production (IP) is likely to have bounced back somewhat in March from the surprisingly slow pace of 6.8% yoy and 0.5% mom in the previous two months. 

Societe Generale says they forecast yoy growth to tick up to 7.2%. However, even if our above-consensus call proves to be correct, quarterly IP growth will still end up much lower again at 6.9% yoy compared with 7.6% in fixed asset investment (FAI) growth is expected to print at 13.7% yoy, dragging yearto-date growth slightly lower from 13.9% previously to 13.8%. 

Housing investment is likely to have been the weak spot, which  robably prompted policymakers to further relax the mortgage rules in late March. 

However, nominal retail sales  likely grew faster by 11.1% in March, compared with 10.7% yoy in the first two months of the year. Compared with Q4 2014, IP growth was significantly slower in Q1, while FAI growth as well as retail sales growth was modestly softer. 

"we expect GDP growth to decelerate further from 7.3% yoy previously to 7% yoy. However, we see one area for a potential upside surprise. The nominal trade surplus in Q1 widened further from its record level of Q4 last year and in yoy terms trade surplus growth simply surged. Even adjusted for price factors, the contribution from net exports might have been substantial", continued Societe Generale