Encouraging spending activity in China has bolstered the chance it could shift its economic narrative towards recovery, according to Khoon Goh, Head of Asia Research at ANZ.
Speaking to the 2024 ANZ Debt Conference, Goh said spending during the recent Lunar New Year period had been encouraging, and a tick above even pre-pandemic levels.
“If that could continue to be sustained, I think we might start to see the narrative shift a little bit on China,” he said. “Before we start to see some more moderate recovery ahead.”
Goh said China was unlikely to change its fundamental economic policies, but labelled some of the work it had been doing recently as “so far, so good”.
“There are certainly policies that are changing, to try and address the cyclical downturn, to turn things around,” he said.
Also on the panel were Catherine Birch, Senior Economist, and Viacheslav Shilin, Head of Credit Strategy at ANZ. The panel was hosted by Mahjabeen Zaman, Head of FX Research.
Goh said the state of growth in China had had a surprising lack of impact on economic activity in south-east Asia- and indeed, that region was showing impressive strength.
“I think this highlights the resiliency of the region,” he said.
Goh said shifting investment around Asia in recent times had played a big role in this.
“There’s been a massive amount of shift in capital flows in the region,” he said.
Turning to Australia, Birch said the Reserve Bank of Australia was unlikely to start cutting interest rates until November, later than other central banks around the world, because of three reasons - the RBA’s desire to avoid unnecessary damage to the labour market, the lagging wage cycle, and upcoming tax cuts. And even then, any easing cycle would likely be brief, she said.
“We’re expecting only a shallow easing cycle in Australia, moving back towards neutral rather than having to stimulate the economy,” Birch said.
Over 350 people attended the ANZ Debt Conference. Now in its 14th year, the conference is the largest of its kind in Australia.
