China’s central bank says economic growth to bounce back 'rather swiftly'

Economic indicators will show significant improvement in the second quarter, says deputy governor of People’s Bank of China

The Chinese central bank sees significant improvement in the country's economy during the secodn quarter of this year. Reuters

China’s economy will swiftly return to its potential growth rate and there will  be significant improvement in the coming three months, a senior central bank official said on Sunday.

"Economic indicators will likely show significant improvement in the second quarter and the Chinese economy will return to potential output level rather swiftly," said People's Bank of China deputy governor Chen Yulu.

He did not announce new measures but repeated earlier pledges to keep credit growth stable and make good use of the central bank’s targeted easing approach.

China was hit hard in February by the virus and the measures taken to stop its spread, resulted in a historic slump seen across all economic indicators as quarantines and shutdowns stopped the movement of goods and people.

Although economic activity has restarted, it is still not back at normal levels, with many services business struggling and the outlook for exporters remains grim as the outbreak affects the rest of the world.

“Based on payments, deposits and loan data since March, China’s real economy is improving somewhat due to earlier targeted monetary policies,” Mr Chen said. The PBOC will continue to direct funding to private and small companies as well as those critical to the supply chain, he said.

China’s surveyed unemployment rate jumped in March to 6.2 per cent, indicating headwinds for local consumption ahead.

The stock market has been more resilient than other global markets, with low risk and the impact of the virus being absorbed, said Li Chao, vice chairman of China’s securities regulator, who spoke at the same briefing.

The Chinese currency will continue to stay at around 7 yuan per dollar with movement on either side of that level, according to Mr Chen.

While the impact of the virus on supplies and inflation will likely continue for a while, price hikes will start to moderate as economy resumes, and inflation growth will slow from the second quarter and continue the trend during the rest of the year, Mr Chen said.