Second quarter GDP year-on-year growth approximation 8%--two quarterly macroeconomic data outlook

GDP grew by about 7.8% in the second quarter of 2009, significantly above the already optimistic forecasts (up 7% per cent year-on-year). The year-on-year increase in the CPI in June could be slightly reduced from 1.4% in May to 1.5%.　　This means CPI month-on-month growth will be positive for the 4th consecutive month. Yu Qiao The Chinese government will soon release 2009 second-quarter GDP and June economic data. Our forecasts and views on these data are as follows: Year-on-year GDP growth in the second quarter of 2009 will rise to nearly 8% per cent, and we expect GDP growth to be about 7.8% per cent year-on-year in the second quarter of 2009, significantly higher than our previously optimistic forecasts (up 7% per cent).　　This means that the quarterly growth rate of the year is about 16%, and our previous forecast was 12.5%, which grew by 7.2% in the first quarter of 2009. We believe that the June economic activity data will generally show strong quarter-on-quarter growth: 1, we expect June industrial growth will rise from 8.9% to 10% in May.　　This means that after the seasonal adjustment of the month-by-year calculation of the monthly growth rate will be as high as 50%, higher than the month of May 37% quarter-on-quarter growth.　　2, we expect June monthly fixed asset investment growth will increase from May to 42%, which means that the first 6 months of this year's cumulative year-on-year growth of 35.7%, higher than the first 5 months of this year's cumulative year-on-year growth rate. 3, the nominal retail sales growth rate is expected to rise from May to 15.2% slightly to 15.3%.　　Real retail sales growth after the deflator could hit a record high. 4, we expect June exports year-on-year growth rate of about 22%, which means that the monthly growth is equal to zero, significantly higher than the May seasonally adjusted after the calculation of the year to 19.3% of the monthly growth rate. Meanwhile, imports are likely to rebound sharply from May-25.2% to 18%.　　The trade surplus could shrink from $13.4 billion trillion in May to $12.2 billion trillion. CPI and PPI growth, the first time since August 2008, coincided with a 1.5% per cent year-on-year increase in CPI, which could fall slightly from May to 1.4%. This means CPI month-on-month growth will be positive for the 4th consecutive month.　　Equally important, the PPI growth rate is likely to be negative for the first time since September 2008, and we expect its June year-on-year increase to fall from 7.2% in May to 7.6%. Money and credit growth will once again be higher than market expectations we expect a new renminbi loan of 1.5 to 1.6 trillion yuan in June, just below the all-time high of 1.9 trillion in March. The corresponding year-on-year increase in renminbi lending in June will rise sharply from 30.6% in May to 34% to 35%. We think the market is too conservative for the 1.0-1.2 trillion yuan loan in June. It is noteworthy that this yearThe main reason, I think, is that the market forecasts have consistently underestimated the growth of loans in the first place because they mistakenly assume that the real demand for loans is weak, and that the gradual reduction in lending growth will significantly slow as the number of large government-backed investment projects grows.　　In contrast to the market view, we believe that the demand for loans to eligible Non-state-owned enterprises is strong and is becoming stronger, and that government-backed investment projects will continue to be implemented rather than drastically reduced after a brief surge in the beginning of the year. We believe that the trend of May lending and M2 growth data is only temporary (the May year-on-year increase in credit growth but the decline in M2 growth) may be due to changes in the government's fiscal deposits. June M2 year-on-year growth should rise to 27.4% from 25.7% in May, as loans grew. Author unit: Goldman Sachs