China’s tough virus curbs mean that economic activity in the third quarter could be close to flat compared with the previous three months, while full-year growth may fall below 8 percent, a top forecaster said.
“My view is that the Chinese economy should slow sharply in the third quarter, mainly due to the virus but also controls on property,” Market Securities LLP chief economist Christophe Barraud said.
Barraud was Bloomberg’s top-ranked forecaster for the Chinese economy last year.
Photo: Bloomberg
Barraud’s prediction of 0.3 percent growth in the period between July and September from the previous three months is below the median estimate of 1.1 percent in a Bloomberg survey of economists.
Barraud is also bearish on China’s growth for this year compared to the market’s median estimate of 8.4 percent.
“It should be close to 8 percent, but with risks tilted to the downside,” he said. “If there is another outbreak in the fourth quarter, forecasts should be adjusted below 8 percent.” The government has set a target of above 6 percent growth for the year.
Barraud’s prediction came after monthly data showed China’s economy slowing sharply last month, with a slump in retail sales and property construction.
China introduced tougher curbs on travel to squash an imported outbreak of the Delta variant of SARS-CoV-2 from late July. While the measures quickly brought the virus under control, a new cluster has developed in southern China this month, suggesting some restrictions will remain and consumers will continue to be cautious.
“Risks are tilted to the downside because China will keep implementing a zero-tolerance policy concerning COVID-19, particularly ahead of the Winter Olympics in February,” Barraud said.
The France-based economist said that one of his favorite indicators of Chinese economic activity at the moment is the daily number of domestic flights.
“It’s the most reliable data to catch the impact of restrictive measures,” he said.
China is scheduled to release third-quarter gross domestic product data on Oct. 18. In the second quarter, GDP rose 7.9 percent from the same period last year, and 1.3 percent from the previous quarter.
Barraud said his forecasting technique involves trying to collect as much data as possible, including from private providers, before constructing a simple model with just five inputs for each predicted economic variable.
Those forecasts are adjusted based on experience and comparison with competitors, he said.
For the remainder of the year, infrastructure investment and fiscal spending are to be key variables indicating the extent to which Beijing is trying to support growth, he said.
The focus could be more on public investment “because everyone is waiting for public support,” he said.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has secured three construction permits for its plan to build a state-of-the-art A14 wafer fab in Taichung, and is likely to start construction soon, the Central Taiwan Science Park Bureau said yesterday. Speaking with CNA, Wang Chun-chieh (王俊傑), deputy director general of the science park bureau, said the world’s largest contract chipmaker has received three construction permits — one to build a fab to roll out sophisticated chips, another to build a central utility plant to provide water and electricity for the facility and the other to build three office buildings. With the three permits, TSMC
The DBS Foundation yesterday announced the launch of two flagship programs, “Silver Motion” and “Happier Caregiver, Healthier Seniors,” in partnership with CCILU Ltd, Hondao Senior Citizens’ Welfare Foundation and the Garden of Hope Foundation to help Taiwan face the challenges of a rapidly aging population. The foundation said it would invest S$4.91 million (US$3.8 million) over three years to foster inclusion and resilience in an aging society. “Aging may bring challenges, but it also brings opportunities. With many Asian markets rapidly becoming super-aged, the DBS Foundation is working with a regional ecosystem of like-minded partners across the private, public and people sectors
BREAKTHROUGH TECH: Powertech expects its fan-out PLP system to become mainstream, saying it can offer three-times greater production throughput Chip packaging service provider Powertech Technology Inc (力成科技) plans to more than double its capital expenditures next year to more than NT$40 billion (US$1.31 billion) as demand for its new panel-level packaging (PLP) technology, primarily used in chips for artificial intelligence (AI) applications, has greatly exceeded what it can supply. A significant portion of the budget, about US$1 billion, would be earmarked for fan-out PLP technology, Powertech told investors yesterday. Its heavy investment in fan-out PLP technology over the past 10 years is expected to bear fruit in 2027 after the technology enters volume production, it said, adding that the tech would
RSS