CHINA’S ECONOMY: ENTERING TROUBLED WATERS? Oscar Monterroso Chief Economist Central Bank of Guatemala May 9, 2008
China´s Rapid Growth Finally Ignites Overheating? Source: Global Insight
China´s Liquidity Growth Remains High Despite Rate Hikes Source: Global Insight
Excess Liquidity Has Not Yet Pressured CPI Inflation … Source: Global Insight
… But Has Inflated the Asset Markets Source: Global Insight
Price Control Has Kept China´s Domestic Energy Prices Long Under International Prices Source: Global Insight and Bloomberg
Exports to U.S. Main Drag on Recent Chinese Export Growth Source: Global Insight
Chinese Export Outlook Depends on Whether the U.S. Will Drag the Global Economy Source: International Monetary Fund
U.S. Recession Impactful on Chinese Exports Source: Consensus Forecast
Economy could get squeezed domestically and externally. Monetary policy tightening has started Exports to the U.S. already slowing Policy dilemma – exports and investment/inflation in different phases of cycle and require countering policies. Without inflation risk, Beijing is willing to continue loose monetary policy to cushion the impact of sliding exports. Inflation is key! Conclusion
May, 2008