China’s exports seen rising more quickly in May, boosting growth prospects: Reuters poll

By Thomson Reuters Jun 5, 2024 | 4:49 AM

By Joe Cash

BEIJING(Reuters) – China’s exports likely grew more quickly and for a second month in May thanks to improving overseas demand, giving officials some comfort as they navigate numerous challenges at home to shore up an uneven economic recovery.

Trade data for May is expected to show outbound shipments grew 6.0% year-on-year by value, according to the median forecast of 32 economists in a Reuters poll on Wednesday, up from the 1.5% increase recorded in April.

Imports likely grew 4.2% last month, slower than the 8.4% gain seen in April. The data will be released on Friday.

Over recent months, a flurry of data has shown different parts of the $18.6 trillion economy recovering at varying speeds.

While first quarter growth blew past forecasts and strong March export and output data suggested improving global demand might aid officials’ efforts to get the economy back on a more even keel, more recent indicators reflecting soft domestic consumption have eroded much of that earlier optimism.

A protracted property crisis remains the biggest stumbling block to a full-blown economic revival, analysts say. At the same time, deflationary pressures continue to stalk the economy and the U.S. and European Union are threatening China’s exports with tariffs.

“Global demand is giving a bigger boost to China’s economy than we had anticipated this year and foreign tariffs will make little difference to aggregate export performance in the near term,” said Julian Evans-Pritchard, head of China economics at Capital Economics in a note.

“We now think that China’s economy will expand 5.5% this year as a result,” he added.

The International Monetary Fund last week revised up its China growth forecast by 0.4 percentage points to 5% for 2024 and 4.5% in 2025, but warned the property sector remained a key growth risk.

The trade data will likely be aided by a lower base of comparison, after rising interest rates and inflation in the U.S. and Europe squeezed external demand last May. However, a global cyclical upturn in the electronics sector that saw South Korean exports to China – a leading indicator of China’s imports – hit a 19-month high last month should also help exporters from the Asian giant.

The median estimate in the poll predicted China’s trade surplus will come in at $73.0 billion, up from 72.35 billion in April.

(Reporting by Joe Cash; Polling by Milounee Purohit and Devayani Sathyan in Bengaluru; Editing by Shri Navaratnam)