(Bloomberg): China’s export outlook is improving, helping to boost growth in the world’s second-largest economy even as consumer spending slows, according to a Bloomberg survey of economists.

Exports are expected to grow 4.3 percent this year from a year earlier, according to the median forecast of 22 economists in the survey conducted June 17-24. In May, they were expected to grow 2.8 percent. China’s growth could rise to 5 percent, according to the median forecast of 68 economists, faster than the 4.9 percent forecast in the May survey.

“We expect the trade outlook to improve over the coming months as global demand shifts from services to goods,” said Zhou Xue, senior China economist at Mizuho Securities Asia.

In contrast to the survey findings, Goldman Sachs Group Inc. said in a June 23 note that Chinese clients are increasingly skeptical about export growth over the next few quarters, as investors worry about the sustainability of supply growth, especially given weak domestic demand, and the risk of trade tensions.

Economists surveyed by Bloomberg cut their forecasts for consumer and producer price growth and retail sales growth this year, reflecting pessimism about demand as the housing market continues to sag.

“Recent macro data confirms that the real estate sector continues to be a drag,” said Arjen van Dijkhuizen, senior economist at ABN Amro bank. “Accelerating export momentum remains supporting growth, but external risks are rising as China’s excess capacity leads to trade tensions, with the US and Europe seeking to protect strategic industries.”

China is unlikely to escape deflationary pressures this year. Economists now see the consumer price index (CPI) rising just 0.6 percent this year and the producer price index (PPI) falling 1 percent, down from forecasts made in May, as worries about job security, income prospects and falling asset values ​​make consumers reluctant to spend.

The timing of the cut in the reserve requirement ratio has been pushed back to the third quarter from the second quarter. The People’s Bank of China has refrained from easing monetary policy in recent months to protect the yuan, partly due to ample market liquidity.

Regarding the timing of the cut in the policy interest rate and the loan prime rate (LPR), an indicator of lending rates, economists maintained their prediction that it would be in the July-September quarter.

Original title: Economists Raise China Growth Forecasts as Exports Improve (excerpt)

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