The Chinese economy is slowing and the last six months of 2014 were certainly weaker than the first six months.
But, as this new Year of the Goat begins there is a renewed optimism in the economy, Andrew Whitford, head of Westpac’s Greater China banking operations, told Business Insider.
Whitford said that Westpac’s customers in China were, even in the run-up to the Chinese New Year, increasingly looking at opportunities in the new year and he “expects an uptick” in confidence in the economy in general and consumer confidence in particular.
That’s a view that seems a little at odds with the Westpac MNI Consumer Sentiment Index released yesterday. The index decreased by 0.1 points in February, printing 112.0 versus 112.1 in January. But Whitford said Westpac’s view, both in index terms and based on its own reading of things on the ground in China, is that consumer sentiment is bottoming out.
Indeed, Westpac senior international economist Huw McKay wrote in a note accompanying the release of the survey:
Three of the five components that go into the calculation of the Westpac MNI China CSI increased from the previous month. Business conditions ‘one year ahead’ and ‘five years ahead’, and ‘time to buy a major household item’ all moved higher, the latter strikingly so.
That’s important according to McKay because “periods where the forward looking responses are materially stronger than current assessments tend to presage improvement in economy-wide conditions”.
While McKay added this outcome is not guaranteed, the outlook is looking a little brighter.