BLACKROCK INVESTMENT INSTITUTE

A renewed spring in Europe's step

We expect Europe to shake off its current soft patch later this year, getting a boost from China’s stimulus efforts and any resulting rebound in global manufacturing.

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China’s credit growth accelerates

April 17 – A key element of our macro outlook is the expectation that Chinese growth should stabilise and pick up modestly this year – following significant easing efforts by policymakers.

The latest lending data for March showed that policymakers were continuing to support credit growth. Lending volumes grew at a sharply higher rate in March, with smoother three-month measures of credit growth clearly climbing higher. This confirms that the stronger data for the first two months of the year were not just isolated spikes due to seasonal issues or frontloading of local government issuance.

Firmer credit support for the economy should support overall Chinese activity going ahead, with the March growth data looking encouraging. We expect this to then spill over into China-exposed regions, notably emerging markets and Europe.

Total social financing and renminbi loans in China, 2011-2019

Sources: BlackRock Investment Institute, with data from the People’s Bank of China, April 2019. Notes: This chart shows rates of growth of credit aggregates in China. The dotted lines show the monthly growth rates (in annualised terms) of stocks outstanding, while the solid lines show the three-month-on-three-month growth rates (in annualised terms). Renminbi loans covers formal bank lending while Total Social Financing (TSF) is a broader measure that includes, for instance, bond issuance.

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