China’s Q1-22 GDP beat expectations but the global outlook remains bleak

Ukrainian President Zelensky declared that the widely awaited Russian offensive in the Donbass region started yesterday after most Russian troops and artillery moved from the west of Ukraine late March. This could continue to weigh on the global economic outlook and support a strengthening of EU sanctions against Russia, with a ban on Russian oil products on the table (see Oil comment).

In China, official Q1-22 GDP figures surprised on the upside at 4.8% yoy compared to a consensus at 4.4%. But retail sales fell by 3.5% yoy in March due to the impact of massive lockdowns across major cities including Shanghai. China’s central bank said on Friday that it will cut its reserve requirement ratio by 25 basis points, releasing the equivalent of $83 billion of liquidity to support the economy. In the meantime, the World Bank cut its global growth forecast for 2022 on Monday by almost 1 percentage point, to 3.2% from 4.1%.

Run-off polls for the French presidential election continue to show a tight victory of President Macron ahead of the only TV debate against its far-right challenger Marine Le Pen planned tomorrow evening. The FR-DE 10-year interest spread is retreating further from highs reached before the first round of the election.

On the agenda today, US building permits and housing start figures and the release of the IMF World Economic outlook.