DBS revises China’s monetary policy outlook, ruling out LPR cuts amid resilient trade but weak consumption and investment.
China’s exports jumped 14.1% year-over-year in April, rebounding from a 2.5% rise in March, driven by non-US trading partners. Imports surged 25.3% as manufacturers boosted purchases of intermediate goods amid stronger export orders.
Domestic demand remained sluggish, with fixed asset investment contracting 1.6% in April after a brief 1.7% rebound in Q1. Private investment fell 5.2% YoY, while industrial production and credit growth stayed subdued. Producer price inflation accelerated, but consumer prices lagged.
DBS now expects no cuts to the one-year loan prime rate over the next 18 months, citing energy price pressures and a shift toward fiscal policy support. The divergence between robust external trade and weak internal demand persists as a key risk.