BOC Research Institute released the 2021Q4 Economic and Financial Outlook (the "Report") in Beijing on September 28, 2021. The Report reviews the global and China's economic and financial performance as well as the global banking performance in 2021Q3. It also provides an outlook on the economic and financial situations and the global banking trends in 2021Q4.
In terms of global economy and finance, the Report notes that 2021Q3 saw subdued growth in the US, European and Asian-Pacific economies amid a global COVID-19 resurgence, denting the recovery momentum of world economy. Global trade kept growing fast, mainly driven by commodity price hikes, shipping cost surge and supply chain disruptions. Looking forward to Q4, the global economy will expand slightly faster. The US and European central banks will change their monetary policies soon, tightening the liquidity across global financial markets. The move will trigger market volatility and financial risks that deserve particular attention. The Report also provides a special analysis on the inequalities caused by the Fed's ultra-easy monetary policy and the implications, prospects and macro spillover effect of the EU carbon tariffs.
In terms of China's economy and finance, the Report notes that the Chinese economy came under bigger downward pressure in 2021Q3 as most economic indicators weakened year-on-year in a slowing national economy, on both supply and demand sides, partly due to local COVID-19 resurgence, property market cooling-off and frequent flooding. China's GDP growth for Q3 is estimated to be around 5%. Uncertainties in the pandemic will continue to dent demand recovery and supply chain stability in Q4. Export growth may retreat from highs. The dual control over total energy consumption and energy intensity will mount to bigger pressure to impact production activity and product prices. Extra attention should be paid to such issues as the rampant defaults among property developers, micro and small businesses in bigger troubles and uneven development of industries. GDP is estimated to grow by around 4% in Q4, and annual GDP growth for 2021 is projected to be about 8.1%. Given the bigger pressure to keep growth stable, macro economic policies should step up cross-cyclical arrangements, speed up public spending including general public budgets and government funds, match funds with projects, enhance job security for vulnerable populations, keep strengthening support for micro, small and medium-sized enterprises and steadily implement policies on dual control over total energy consumption and energy intensity.
In terms of global banking developments, the Report notes that the global banking industry showed slow growth with still-diverging profitability in 2021Q3. Amid sustained recovery of Chinese economy, Chinese banking industry scored strong growth with profitability basically shrugging off the fallout from the COVID-19. Looking into Q4, challenges will still stand in the way to global recovery. There will be national disparities and adjustments in banking activities. The Chinese banking industry will continue to maintain stable, rapid expansion with marked improvements in profits, and stable overall quality of assets. At present, all countries attach great importance to growth in consumer spending amid the COVID-19 shocks. As China is stepping up the effort to create a new development pattern featuring "dual circulation", which takes the domestic market as the mainstay while letting domestic and foreign markets boost each other, and tapping into the potential for domestic demand growth, its retail banking is entering a new stage of growth to become a new engine for banking development.
