ANZ anticipates a ‘fairly positive’ economic outlook for Asian region

China should come close to hitting its 5 per cent growth target for the year following the latest wide-ranging stimulus measures, experts say.

A slump in China’s property sector and house prices is weighing on consumer sentiment. Picture: Getty Images

China should come close to hitting its 5 per cent growth target for 2024 following the latest wide-ranging stimulus measures, even as the country’s prospects decouple from the rest of Asia, ANZ head of Asia research Khoon Goh predicts.

Mr Goh expects a “fairly positive” economic outlook for the Asian region and that China will see economic growth of 4.9 per cent in 2024, just shy of its 5 per cent target.

In major moves last week, China’s policymakers outlined a host of measures to stimulate its economy, which boosted confidence into a host of markets, including Australia, given potential implications for demand for commodities such as iron ore.

The stimulus measures included interest rate cuts and freeing up cash through mortgage refinancing measures.

“It would be great if the Chinese economy can start to show signs of a pick-up, and I think the stimulus measures that were announced last week, while early days, it looks like it has definitely … fired up the equity market,” Mr Goh said.

“Importantly, I think what we want to see is a return of confidence amongst Chinese households, because that really has been missing.

“The Chinese consumer has been spending, but they have been downgrading, if you like. So rather than overseas travel, they’ve been travelling domestically … domestic travel is an all-time high.”

ANZ head of Asia research Khoon Goh.

Mr Goh reiterated that a slump in China’s property sector, including house prices, was weighing on consumer sentiment.

“The other aspect of the stimulus is, you know, really trying to put a floor on the declining property prices,” he said.

“So I think that’s also very important part of the package that was announced last week. So hopefully that can help to arrest the slide in the property market, start to instil some confidence back into

“Chinese households and get them spending again.”

Economic pressures are buffeting global luxury brands this year, amid tempering demand from consumers in markets including China. Stocks including Burberry and LVMH – which includes up-market brands such as Louis Vuitton and Tiffany & Co – rallied strongly last week on the back of the stimulus measures.

Mr Goh also noted a decoupling between China’s economy and other parts of the Asian ­region, given other markets were attracting more production and China’s exports remained ­robust.

“Asia growth actually has been surprising to the upside in the first half of the year,” he said. “Growth has actually been coming in better than expectations, particularly on the export side, and this is despite the Chinese economy struggling.”

There has been a “decoupling” between China’s economy and other parts of the Asian ­region. Picture: AFP

Mr Goh noted the decoupling was partly linked to China’s exports holding up, meaning the rest of the region wasn’t being hit as hard from the slowdown in consumer spending from that market.

“The rest of Asia is more closely linked to China’s exports than necessarily their consumer,” he added. “That’s why the weakness in Chinese consumer demand hasn’t really had as big as a negative impact for the rest of ASEAN, with the exception of tourism.”

Mr Goh also said there was a continued trend for some Chinese companies and multinationals from other countries to “reduce reliance” on China, so other parts of the region including Vietnam, India and Malaysia were benefiting.

His comments came as geopolitical risks were heightened as the Israeli Defence Force confirmed it was undertaking raids in southern Lebanon.

Mr Goh said investors would be monitoring the conflict for any supply-side shocks.

“If it starts to have a material impact on oil supply, that’s when financial markets will wake up and start the price that,” he said.

Mr Goh said the US presidential election had broader ramifications for Asian markets, given the potential impact on trade flows should Donald Trump emerge as the next leader.

“There is still a lot of uncertainty over who will win,” he said.

US Federal Reserve chair Jerome Powell on Monday signalled the central bank will continue to reduce interest rates to buoy economic growth, but noted he didn’t see a reason for the Federal Reserve to cut rates as aggressively as they did at their most recent meeting.

The reporter travelled to Singapore as a guest of ANZ.

Originally published as ANZ anticipates a ‘fairly positive’ economic outlook for Asian region