On March 30, 2015£¬Bank of China issued its report for Q2 2015 Economic and Financial Outlook (hereafter referred to as the report).In the report, there is an outlook for the world and China¡¯s economic and financial situation and the world banking industry, based on the review of Q1 2015. Meanwhile, some specific issues are analyzed in the report.

Global Economic and Financial Outlook: So far, global economic recovery has been confronted with further differentiation and insufficient endogenous driving forces. Relaxed policies and the withdrawal of short-term factors will accelerate growth in 2015 which, however, will be exposed to potential risks such as policy differentiation and regional turbulence. Fluctuations in global financial markets are influencing different economies in different ways. The US dollar is expected to be stronger, but commodities will see downward movements in price. There will be further divergence in global Bond markets, imposing higher solvency pressure on emerging markets. Global monetary policies are coming to a new watershed. It is expected that the Federal Reserve (Fed) will kick start the interest rate increase in the latter half of 2015, while the euro area and Japan will adopt more easing policies. Policy differentiation will exert new effects on global capital flows. The US will see stronger economic recovery; Europe will face more difficulties; Japan is expected to be trapped in poor economic growth; Asian EMs will continue at a speed exceeding the others; Africa will maintain the momentum of development; Latin America, on the contrary, is expected to be lackluster.

China's Economic and Financial Outlook: In Q1 2015, while continuing the slowdown of last year due to property market adjustments, overcapacities and weak external demands, China¡¯s economy sees refined structure, enhanced quality and improved income distribution as well as remarkably promoted sustainability, balance and inclusiveness in development. Looking into the second quarter, we expect stable economic growth, given the improving external environment and the increasing effects of growth-stabilizing policies. However, economic growth will also face uncertainties caused by inertial reduction in investment, higher leverage ratio, and continued negative PPI. The Q2 GDP is predicted to grow at around 7.2%, while CPI may go up by about 1.3%. Under the currently high downturn pressure and low inflation, proactive fiscal policy and more flexible and targeted monetary policy are needed so as to create a favorable monetary environment for stable growth. Objectively speaking, stabilizing growth will increase the leverage; while in the case of high leverage ratio, "deleveraging" approaches will be required. Therefore, it is necessary to keep a balance. We suggest insisting on range-based macro-control instead of large-scale stimulus. In particular, against the backdrop of "absorbing the effects of previous economic stimulus policies", relatively higher leverage and serious overcapacities, China needs to balance between stabilizing growth and "deleveraging".

Global Banking Industry Outlook: In 2014, global major banks saw an overall solid performance with slightly lower assets and liabilities, steadily improving profitability and significantly stronger asset quality and risk absorption capacity. The performance of banking industry in the major economies continued to diverge: the US and UK witnessed generally steady operation; Euro Area and Japan faced remarkable challenge in the context of quantitative easing; while China maintained sound operation despite pressure. In 2015, the banking industry in China will face a more complex operating environment. With the profound changes in economic growth, monetary policy, financial reforms and the process of internationalization, the banking industry of China will be confronted with unprecedented pressure. Seizing the opportunity to make proactive transformation is crucial to sustainable sound development.

Please click to download:

  • A Global Economic and Financial Outlook (Q2 2015).pdf
  • B China's Economic and Financial Outlook (Q2 2015).pdf
  • C Global Banking Industry Outlook (Q2 2015).pdf




distributed by