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Preview: March CPI may rebound, trade deficit to remain
By Wang Yanlin |
April 5, 2012, Thursday
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Online Edition
Online Edition
CHINA'S inflation may rebound in March and a trade deficit is still likely because of sluggish exports, analysts predicted before China is to release the data next week.
Economists said the data will leave the world's second largest economy with little room for adjusting policies, which are foreseen to remain stable in the second quarter.
"The economy is slowing, but the pace of slowdown is better than expected," said Lu Zhengwei, chief economist at Industrial Bank. "The policy stance will be kept neutral because of uncertainties in inflation and exports."
Lu forecast the Consumer Price Index, the main gauge of inflation, will bounce back to 3.5 percent in March from the 20-month low of 3.2 percent recorded in February.
"The rebound is mainly out of higher food prices, especially vegetable and aquatic products," Lu said. "Inflationary pressure has not been fully dispelled, and thus the government is unlikely to relax the policy stance abruptly."
China raised the retail prices for gasoline and diesel last month by a larger-than-expected margin, and planned to introduce a graduated power tariff system, stoking fears of rising living costs in the future.
Tang Jianwei, an economist at Bank of Communications, also projected the inflation rate will edge up to 3.5 percent in March.
"We believe China is still on a track of weakening inflation. But no doubt, the country should be alert to price rebounds," Tang said.
Meanwhile, a trade deficit may continue in March after China reported the largest trade deficit in a decade in February.
"Due to weak exports, China may deliver a trade deficit again," Industrial Bank's Lu said. "As imports are also weakening, the deficit will narrow sharply from that in February."
He expected the trade deficit in March to narrow to US$9 billion from US$31.5 billion in February, and ease pressure for a stronger yuan.
The National Bureau of Statistics is due to release the inflation data next Monday and make public the first-quarter gross domestic product next Friday. Trade data will be unveiled next Tuesday by the General Administration of Customs.
Economists said the data will leave the world's second largest economy with little room for adjusting policies, which are foreseen to remain stable in the second quarter.
"The economy is slowing, but the pace of slowdown is better than expected," said Lu Zhengwei, chief economist at Industrial Bank. "The policy stance will be kept neutral because of uncertainties in inflation and exports."
Lu forecast the Consumer Price Index, the main gauge of inflation, will bounce back to 3.5 percent in March from the 20-month low of 3.2 percent recorded in February.
"The rebound is mainly out of higher food prices, especially vegetable and aquatic products," Lu said. "Inflationary pressure has not been fully dispelled, and thus the government is unlikely to relax the policy stance abruptly."
China raised the retail prices for gasoline and diesel last month by a larger-than-expected margin, and planned to introduce a graduated power tariff system, stoking fears of rising living costs in the future.
Tang Jianwei, an economist at Bank of Communications, also projected the inflation rate will edge up to 3.5 percent in March.
"We believe China is still on a track of weakening inflation. But no doubt, the country should be alert to price rebounds," Tang said.
Meanwhile, a trade deficit may continue in March after China reported the largest trade deficit in a decade in February.
"Due to weak exports, China may deliver a trade deficit again," Industrial Bank's Lu said. "As imports are also weakening, the deficit will narrow sharply from that in February."
He expected the trade deficit in March to narrow to US$9 billion from US$31.5 billion in February, and ease pressure for a stronger yuan.
The National Bureau of Statistics is due to release the inflation data next Monday and make public the first-quarter gross domestic product next Friday. Trade data will be unveiled next Tuesday by the General Administration of Customs.
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