<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-820x461.jpeg" alt="" class="wp-image-550005" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/11/106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A flag stall at the Yiwu Wholesale Market in Zhejiang province, China, on May 10, 2019. Aly Song | Reuters</figcaption></figure>



BEIJING — The size of China’s highly anticipated stimulus plans will likely depend on the outcome of the U.S. presidential election, analysts said.



Investors expect Beijing to announce details on fiscal support Friday. That’s when the standing committee of the National People’s Congress — China’s parliament — is due to wrap up a five-day meeting. The same gathering last year oversaw a rare increase in the fiscal deficit.



This year, the meeting’s timing means any details will be out just days after the U.S. has voted Republican nominee Donald Trump or Democrat rival Kamala Harris in as the next president. Polls are set to close Tuesday local time.



“The size of China’s fiscal stimulus package would be around 10~20% bigger under a Trump win than under the scenario of a Harris win,” Ting Lu, chief China economist at Nomura, said in a note last week.



He cautioned that most of China’s challenges are domestic, though there will be some impact from the U.S. election result.



Trump has threatened to raise tariffs on U.S. imports from China by 60% — or reportedly by even 200% in an extreme scenario. Harris, currently vice president, has not yet signaled a major departure from the Biden administration’s approach of restricting China’s access to advanced technology.



More tariffs would hit China’s exports, a bright spot in an economy grappling with a real estate slump and tepid consumer demand.



Increased trade restrictions would require China to rely more on domestic demand to boost growth, Zhu Bin, chief economist of Nanhua Futures, said in a video presentation last week. That’s according to a CNBC translation of his Mandarin-language comments.



“Without question we can be certain of one thing — if Trump wins the election, China’s domestic stimulus will only be larger, not smaller,” Zhu said. He expects Trump has a greater chance of winning, which he said would increase downward pressure on the Chinese yuan versus the U.S. dollar.



Political analysts debate whether China’s relations with the U.S. would be better under Trump or Harris.



“I think at this point, probably from China’s view, a potential president Harris [makes it] easier to expect what policies likely come,” said Liqian Ren, leader of quantitative investment at WisdomTree.



That doesn’t mean Beijing will embark on large-scale support. Chinese authorities are “constrained by the U.S.-China competition, so the priority number one is to be able to upgrade technology across the board,” She said. “I think as long as that’s your goal then the government’s willingness to stimulate is still going to be lukewarm.”



Ren expects the scale of stimulus will be determined not by who wins the election, but the stock market reaction.



Market volatility in China, but not the United states, is likely to make “China feel more obligated to counter this volatility,” she said. In contrast to three or four years ago, Ren said, Chinese stock market volatility today has a greater impact on economic confidence.



Chinese stocks have tempered their gains in recent weeks after surging in late September. Chinese President Xi Jinping on Sept. 26 led a high-level meeting calling for strengthening fiscal and monetary policy support, and halting the decline in real estate.



While the People’s Bank of China has cut interest rates, the Ministry of Finance has yet to release details on widely anticipated fiscal stimulus. Finance Minister Lan Fo’an last month hinted at an increase in the deficit, and indicated any changes needed to undergo an approval process before being announced.



<h2 class="wp-block-heading" id="h-how-large"><a></a>How large？</h2>



Analyst forecasts for additional debt issuance vary. China is considering more than 10 trillion yuan in debt issuance over a few years, Reuters reported Tuesday, citing sources.



Chinese authorities may not announce a specific number, but if they do, it should be more than 4 trillion yuan, given that was the amount issued in the wake of the 2008 financial crisis, said Zong Liang, chief researcher at Bank of China. He expects the deficit could be expanded beyond 4%.



The Chinese government set a deficit target of 3% for this year, after increasing it to 3.8% late last year.



WisdomTree’s Ren said her analysis of official statements, media reports and investment notes revealed that stimulus expectations are inherently about the same. Whether it is 10 trillion yuan over three to five years, or 2 trillion yuan in one year, the average is about 2 trillion yuan in support a year, she pointed out.



<h2 class="wp-block-heading" id="h-consumption-still-in-question"><a></a>Consumption still in question</h2>



“I think people right now are focusing a lot on the topline number,” Ren said. “But they are missing [how] the local government, they are doing a lot of things that are actually counter[ing] stimulus.”



She noted how local authorities have so strictly enforced tax collection in some areas that they have discouraged business activity. Despite some central government support, she said, she expects it will “probably be quite a while” before local authorities “feel they have the cash to spend.”



Dozens of companies in China this year disclosed in stock exchange filings that they have received notices from local authorities to pay back taxes tied to operations as far back as 1994. Local governments once relied on land sales to real estate developers for revenue.



The finance ministry has emphasized its focus on addressing local government debt problems. Analysts have pointed out how additional stimulus will also likely go toward banks, not direct handouts to consumers.



Consumption stimulus may come more from property support at this stage, Citi analysts said in a report Friday. “Having said that, we believe more decisive consumption support could still be a realistic option under more adverse tariff scenarios.”

106621131-15949940512020-07-16t171324z_1245378320_rc2huh9ed5wu_rtrmadp_0_usa-china-travel

China gears up for a big week as markets await U.S. elections and stimulus details

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9-820x461.jpeg" alt="" class="wp-image-548676" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Line-up of pumpkins in the Netherlands, on Oct. 27, 2024. Nurphoto | Nurphoto | Getty Images</figcaption></figure>



Inflation in the 20-nation euro zone rose to 2% in October, preliminary figures released by statistics agency Eurostat showed Thursday.



Economists polled by Reuters had forecast a headline figure of 1.9%. The September headline reading was revised down to 1.7% from 1.8% on Oct. 17, below market expectations.



The biggest upward pull in the headline rate came from food, alcohol and tobacco, where price rises accelerated to 2.9% from 2.4%.



Core inflation, which excludes those volatile components along with energy prices, was unchanged at 2.7%, slightly higher than the 2.6% expected. Services inflation — an important gauge of domestic price pressures — also held steady at 3.9%.



The euro was up 0.17% against the U.S. dollar shortly after the release, trading at a two-week high of $1.0873.



The fresh Thursday inflation print is seen as crucial in judging whether the European Central Bank could consider implementing a jumbo half-percentage-point cut in interest rates at its next meeting in December.



The central bank has so far trimmed rates three times this year, making quarter-point increments that altogether took the central bank’s key rate from 4% to 3.25%.



Markets are currently pricing another 25-basis-point reduction in December.



<h2 class="wp-block-heading" id="h-euro-zone-growth"><a></a>Euro zone growth</h2>



Traders are also considering the latest growth figures for the euro area, which showed better-than-expected 0.4% expansion in the third quarter, even as analysts predicted further weakness ahead.



The ECB said during its October meeting that the process of disinflation was “well on track” and that sluggishness in the euro zone’s economic activity had added to its confidence that inflation will not resurge dramatically.



“Hotter eurozone inflation, stronger growth and record low unemployment wipe out bets for a 50 [basis point] cut,” Kyle Chapman, foreign exchange market analyst at Ballinger Group, said in a note.



Chapman said that, while an uptick in consumer price growth was expected toward the end of the year, services inflation remained sticky.



“A big concern underpinning the risks of inflation undershooting the target was a potential tipping point with the labor market, the surprising resilience of which could be at risk of a sharp unwind in labor hoarding if consumption worsens. That concern is no longer so significant,” Chapman stressed, pointing to this week’s growth and employment figures.



“Back-to-back 25 [basis point] moves are the way to go. The need for below-neutral rates to rescue a contracting eurozone economy is fading from the discussion, and that negates the need to hurry the easing cycle, particularly with services inflation struggling to come unstuck.”

108055459-1730370522435-gettyimages-2181307807-arroyofernandez-collecti241027_npBx9

Euro zone inflation rises to higher-than-expected 2%, weakening case for jumbo rate cut

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-820x547.jpeg" alt="" class="wp-image-548613" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108054622-1730265200794-gettyimages-2178145462-cfoto-automobi241017_nppCP-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Robots manufacture auto parts at a factory in Ningde, China, on Oct. 17, 2024. Nurphoto | Nurphoto | Getty Images</figcaption></figure>



BEIJING — China’s official purchasing managers’ index for October came in at 50.1, in expansionary territory for the first time since April, according to National Bureau of Statistics data released Thursday.



The data beat expectations for 49.9, according to a Reuters poll. September’s reading was 49.8. The last time the PMI was above the 50-point line that determines contraction from activity was in April, with a reading of 50.4.



“I expect the economic momentum to improve moderately in Q4 as monetary and fiscal policies [loosen],” Zhiwei Zhang, president and chief economist, at Pinpoint Asset Management, said in a note.



China’s parliament standing committee is scheduled to meet next week, and is widely expected to release details on fiscal stimulus after the gathering ends on Nov. 8.



The sub-index for production came in at 52 for October, while that of new orders was 50. Raw materials inventory ticked up to 48.2, still in contraction territory, along with employment at 48.4, which was mildly better than the prior month.



The statistics bureau’s PMI for non-manufacturing activity rose to 50.2 in October. That was up from 50 in September but below August’s 50.3 print.



The employment portion of the non-manufacturing PMI climbed by 1.1 percentage points to 45.8.



A survey released Wednesday by the U.S.-based China Beige Book of 1,436 Chinese businesses between Oct. 18 and 25 found that manufacturing output improved from a year ago. New domestic and export orders also picked up, with export orders from the U.S. falling less sharply in October.



The Caixin China general manufacturing PMI for October is due out Friday, while the Caixin China general services PMI is scheduled for release Nov. 5.



China’s economic growth has slowed, dragged down by tepid consumer demand and a real estate slump. Exports have been a rare bright spot.



Stocks rallied after a series of high-profile stimulus announcements in the last several weeks, including a meeting led in late September by Chinese President Xi Jinping that called for strengthening fiscal and monetary policy support.

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China’s factory activity expands for the first time since April, official survey shows

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906-820x461.jpeg" alt="" class="wp-image-547489" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108052833-1729838789268-gettyimages-2173221937-AA_23092024_1869906.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">UK Finance Minister Rachel Reeves makes a speech during the Labour Party Conference that is held at the ACC Liverpool Convention Center in Liverpool, UK on September 23, 2024.  Anadolu | Getty Images</figcaption></figure>



LONDON — U.K. Finance Minister Rachel Reeves will deliver the government’s hotly awaited debut budget on Wednesday, putting to bed weeks of uncertainty over potential tax hikes and spending cuts.



The fiscal announcement — Labour’s first in almost 15 years — has been the source of much speculation, with Prime Minister Keir Starmer warning of “painful” decisions as his administration seeks to square what it says is a “black hole” in the public finances with its wider pro-growth agenda.



Reeves brought some clarity to that narrative on Thursday, by confirming that she would use her budget to announce a widely anticipated change to the U.K.’s debt rules in a bid to free up billions of pounds for investment. However, she did not specify exactly what the investment rule would change.



“We will measure debt differently. But, of course, we will put guardrails in place,” Reeves told Sky News Thursday, following her initial announcement in the Financial Times.



Reports suggest that the Treasury could target public sector net financial liabilities (PSNFL) in the U.K.’s measure of debt, rather than public sector net debt. The PSNFL measure takes in a wider account of the government’s balance sheet, including financial assets and liabilities, than public sector net debt. The Treasury declined to comment on the proposals.



In a note Friday, Goldman Sachs estimated that the changes could increase the government’s fiscal headroom by around £50 billion ($65 billion). Still, Goldman Sachs noted that the Treasury was unlikely to use all of that added leeway, and that any increase would be phased in gradually “over several years.”



“We think that the Chancellor would be very unlikely to use all the resulting fiscal space and would instead leave a much larger margin of headroom against the debt rule,” Goldman sachs said in the note.



As such, Reeves is still expected to rely heavily on a raft of tax changes to fill what she has described as a £100 billion spending gap ($129.6 billion) over the next five years. Here’s a look at what might change.



<h2 class="wp-block-heading" id="h-what-changes-to-expect"><a></a>What changes to expect</h2>



Labour has repeatedly ruled out increases to income tax, National Insurance social security payments, value-added tax (a sales levy) and corporation tax, insisting it would not renege on pledges outlined in its election manifesto.



More recently, however, the government has shifted its narrative to avoiding tax rises for “working people,” suggesting that changes for higher earners and employers could be on the table.



Starmer fanned speculation last week when he said in an interview with Sky News that people who own shares would not fall within his “definition” of working people. The Treasury later clarified that it was possible for a working person to have a small amount of shares.



The government has also failed to rule out potential changes to National Insurance tax on employers’ pension contributions, which would see business owners pay more to employ workers.



Reports suggest that Reeves could extend the freeze on personal income tax thresholds introduced by the former Conservative government. While the policy does not raise headline income tax rates, it is often dubbed a “stealth tax” as it ultimately drags workers into paying more tax as pay rises tip them into higher tax brackets.



Elsewhere, changes to inheritance tax (IHT) and capital gains tax (CGT) remain on the table as the government seeks to reduce wealth imbalances across the country. That comes even as plans to introduce new levies on Britain’s “non-doms” could be watered down amid concerns it would fail to raise revenues and instead spark a wealth exodus.



Analysts have expressed mixed views over the expected measures, noting that Reeves has a fine line to tread in balancing the books. Goldman Sachs estimated in its Friday note that the government could need to raise £25 billion annually to meet its spending targets.



“Our broad message is that Chancellor Reeves will attempt to navigate a tight set of public finances to meet her dual aims of avoiding material real term cuts in non-protected spending and to raise public investment. Tax increases will be needed to help achieve these,” Investec said in a note Thursday.



Duncan Edwards, CEO of BritishAmerican Business, warned the government against going too far with measures that could harm business.



“Raising taxes, making it more expensive to do business here, penalizing investment through raising capital gains tax and so on, looks like a strange approach to delivering that growth agenda,” Edwards told CNBC’s “Squawk Box Europe” on Friday.



<h2 class="wp-block-heading"><a></a>UK market jitters</h2>



Reeves has faced criticism for not holding the budget closer to Labour’s July 4 election, with critics saying the delay has cast a cloud of uncertainty over the economy and businesses.



Consumer confidence fell in October to its lowest level since March, when former chancellor Jeremy Hunt delivered his last budget, the fresh GfK showed Friday. Business confidence also slipped to an 11-month low this month, S&amp;P Global flash figures indicated Thursday.



Meanwhile, government borrowing costs have risen sharply as memories of former-Prime Minister Liz Truss’s catastrophic September 2022 “mini-budget” remain close to mind. U.K. bond yields climbed following Reeves’ debt rule announcement Thursday, with 10-year gilt yields hovering near a 16-week high at 4.24%. Still, analysts ruled out the possibility of a similar market meltdown.



“Is this going to be a Liz Truss moment? We don’t think so whatsoever,” Andrzej Szczepaniak, vice president of European economics at Nomura, told CNBC’s “Street Signs” on Friday.



“Actually, now the government can carve out investment,” he continued. “That’s actually fairly positive for the U.K. economy. It has a long structural underinvestment situation versus its peers in the G7.”



Such increases to infrastructure investment have been recommended by the International Monetary Fund, which on Thursday raised its growth outlook for the U.K. It now expects the economy to expand 1.1% in 2024, up from its earlier estimate of 0.7%.



“This level of endorsement to these changes will have helped contain bond market reaction and avoid a big strop-out,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, wrote in a note Friday.



— CNBC’s Sam Meredith contributed to this report.

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Britain’s Labour government to deliver debut Budget this week, settling weeks of uncertainty

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1858" height="1045" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632.jpg" alt="" class="wp-image-547350" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632.jpg 1858w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/103308639-GettyImages-128384632-1536x864.jpg 1536w" sizes="auto, (max-width: 1858px) 100vw, 1858px" /><figcaption class="wp-element-caption">View of Iran’s oil industry installations in Mahshahr, Khuzestan province, southern Iran. Kaveh Kazemi | Getty Images</figcaption></figure>



Oil prices slid more than 4% on Monday as Israel’s strikes on Iran over the weekend were dubbed as “limited” by local media, with Citi analysts discounting chances of an escalation that disrupts oil supplies.



Futures for global crude benchmark Brent slid 4.34% to $72.75 a barrel, while U.S. West Texas Intermediate futures dropped 4.54% to $68.52 per barrel.



Israel on Saturday attacked Iran’s military installations in three provinces in response to Tehran launching ballistic missiles at Israel on Oct. 1.



Iranian News agency Tasnim reported the attack, which killed four soldiers, had inflicted “limited damages.” The strike steered clear of oil, nuclear, and civilian infrastructure locations. Local petro news network said that Iran’s oil industry operation is “underway normally” with no disruptions.



For weeks, markets had braced themselves for an Israeli retaliation as Middle East tensions have continued to rise following the attack on Israel by Iran-backed Hamas on Oct. 7 last year.



Oil markets’ key consideration had been a direct engagement between both parties, with concerns of an attack on Iranian oil facilities rising in recent weeks. Iran accounts for up to 4% of global o



“The recent Israel military action is unlikely to be seen by the market as leading to an escalation that impacts oil supply,” Citi analysts wrote in a note on Monday, cutting the bank’s Brent oil forecast by $4 to $70 per barrel over the next three months.



Oil markets are also staring at an oversupply. “With Israel deliberately, and perhaps with some American encouragement, avoiding the targeting of crude oil facilities, the oil market is back to looking at an oversupplied market,” said Andy Lipow, president at Lipow Oil Associates.



Oil production has been increasing not just in key countries such as U.S., Canada and Brazil, but even among smaller players such as Argentina and Senegal, he added.



“Oil prices will remain under pressure for the rest of this year, it may be difficult to see Brent crude oil prices reaching $80 in the foreseeable future,” Lipow told CNBC via email.



The risk premium has come off a few dollars a barrel as the more limited nature of the strikes, including avoiding oil infrastructure, have raised hopes for a de-escalatory pathway, said Saul Kavonic, an energy analyst at MST Marquee.



The spotlight now will be on whether Iran will counter the attack in the coming weeks, which would see risk premium rise again, Kavonic told CNBC, noting that the overall trend still remains one of escalation, with the scope for another round of attacks remaining high.



During a cabinet meeting on Sunday, Iranian President Masoud Pezeshkian emphasized Iran’s right to react to Israel’s attack, but maintained that they do not seek war.



“We do not seek war, but we will defend our country and the rights of our people. We will give a proportionate response to the aggression,” he said.



Market attention will turn to Hamas‑Israel and Israel‑Hezbollah ceasefire talks that resumed over the weekend, director of mining and energy commodities research at Commonwealth Bank of Australia, Vivek Dhar said.



“Despite Israel’s choice of a low‑aggression response to Iran, we have doubts that Israel and Iran’s proxies (i.e. Hamas and Hezbollah) are on track for an enduring ceasefire,” Dhar wrote in a note.

103308639-GettyImages-128384632

Oil prices slide more than 4% after Israel’s ‘limited’ attack on Iran seen as not disrupting supplies

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-820x461.jpeg" alt="" class="wp-image-545014" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108039375-1727312351704-gettyimages-1810856649-32.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Close up stack of gold bars, financial wealth concepts and business Vector Photo Gallery | Istock | Getty Images</figcaption></figure>



Gold is in a “new bullish phase” after prices notched another record high, said asset management firm Sprott Asset Management, echoing other analysts who have predicted that the bullion will continue to scale new heights.



“Gold has entered a new bullish phase, driven by factors like central bank buying, rising U.S. debt and a potential peak in the U.S. dollar,” Paul Wong, market strategist at Sprott Asset Management, wrote in a note, after the price of the yellow metal advanced to a fresh record of $2,700 per ounce on Monday.&nbsp;



Spot gold is currently trading at $2,729.14 per ounce, while gold futures are at $2,741.20.



“Rising U.S. debt-to-GDP ratios have historically led to higher gold prices due to concerns over the sustainability of debt, currency devaluation and debt monetization,” Wong continued.



The U.S. Congressional Budget Office expects public debt to rise from 98% of GDP in 2023 to 181% of GDP in 2053, the highest level in the country’s history.



As debt increases, governments might resort to printing money to address deficits, which can devalue the currency, Wong explained. This erosion of trust in fiat currency enhances gold’s appeal as a reliable store of value.



Persistent inflationary pressures and difficult macroeconomic conditions plaguing global economies suggest that central banks and investors are more likely to allocate to precious metals, he added.



According to World Gold Council data, the net purchases of gold by central banks in the first half of 2024 rose to 483 tonnes, 5% above the previous record set in the first half of 2023.



A growing chorus of analysts have predicted that the price of gold will continue to rise to $3,000, with some expecting the commodity to cross $2,800 in the next three months.



Gold prices “look better now” than ever before, said Michael Widmer, commodities strategist at Bank of America. “I think we’re closer to $3,000 pounds.”



Widmer cited elevated government debt levels and brewing geopolitical uncertainty as reasons for the his bullish outlook.



Pledges from Israel and its adversaries, Hamas and Hezbollah, to continue fighting in Gaza and Lebanon have diminished hopes of a resolution of the ongoing conflict in the Middle East.



Rising geopolitical tensions usually lead investors to flock to safe-haven assets such as gold, motivated by a desire to buffer against risks and instability in global markets.



Citi analysts have also held on to their view that gold will hit $3,000 in the next six to nine months. If oil prices spike due to a near-term escalation in the Middle East, they added, gold should see a lift.



Despite a drop in Chinese retail demand over the last three months, gold prices have still performed “extremely well,” which reflects the willingness of buyers to pay higher prices, according to Citi.



Meanwhile, Commonwealth Bank of Australia’s Vivek Dhar said in a note on Monday that he sees gold averaging $3,000 in the fourth quarter of next year as a result of “persistent weakness in the U.S. dollar.”



Still, Dhar said he expects gold to average $2,800 this quarter. Citi recently upgraded their view, also predicting that gold will hit $2,800 in three months.

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‘New bullish phase’? As gold hits another high, analysts say more records are in sight

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu-820x461.jpeg" alt="" class="wp-image-544730" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048712-1729110726420-gettyimages-2178767848-dsc_1378_dxqewiuu.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A family shops for Halloween candy at a Walmart Supercenter on October 16, 2024 in Austin, Texas.  Brandon Bell | Getty Images</figcaption></figure>



Just because the Federal Reserve is nearing its inflation goal doesn’t mean the problem is solved, as the high price of goods and services across the U.S. economy continues to pose a burden for individuals, businesses and policymakers.



Recent price reports on goods and services, despite being a bit stronger than expected, indicate that the rate of inflation over the past year is getting close to the central bank’s 2% target.



In fact, Goldman Sachs recently estimated that when the Bureau of Economic Analysis later this month releases its figures on the Fed’s favorite price measure, the inflation rate could be close enough to get rounded down to that 2% level.



But inflation is a mosaic. It can’t be captured fully by any individual yardstick, and by many metrics is still well above where most Americans, and in fact some Fed officials, feel comfortable.



Sounding like many of her colleagues, San Francisco Fed President Mary Daly last Tuesday touted the easing of inflation pressures but noted that the Fed isn’t declaring victory nor is it eager to rest on its laurels.



“Continued progress towards our goals is not guaranteed, so we must stay vigilant and intentional,” she told a group gathered at the New York University Stern School of Business.



<h2 class="wp-block-heading" id="h-inflation-is-not-dead">Inflation is not dead</h2>



Daly began her talk with an anecdote of a recent encounter she had while walking near her home. A young man pushing a stroller and walking a dog called out, “President Daly, are you declaring victory?” She assured him she was not waving any banners when it comes to inflation.



But the conversation encapsulated a dilemma for the Fed: If inflation is on the run, why are interest rates still so high? Conversely, if inflation still hasn’t been whipped — those who were around in the 1970s might remember the “Whip Inflation Now” buttons — why is the Fed cutting at all?



In Daly’s eyes, the Fed’s half percentage point reduction in September was an attempt at “right-sizing” policy, to bring the current rate climate in line with inflation that is well off its peak of mid-2022 at the same time as there are signs the labor market is softening.



As evidenced by the young man’s question, convincing people that inflation is easing is a tough sell.



When it comes to inflation, there are two things to remember: the rate of inflation, which is the 12-month view that garners headlines, and the cumulative effects that a more than three-year run has had on the economy.



Looking at the 12-month rate provides only a limited view.



The annual rate of CPI inflation was 2.4% in September, a vast improvement over the 9.1% top in June 2022. The CPI measure draws the bulk of public focus but is secondary to the Fed, which prefers the personal consumption expenditures price index from the Commerce Department. Taking the inputs from the CPI that feed into the PCE measure led Goldman to its conclusion that the latter measure is just a few hundredths of a percentage point from 2%.



Inflation first passed the Fed’s 2% objective in March 2021 and for months was dismissed by Fed officials as the “transitory” product of pandemic-specific factors that would soon recede. Fed Chair Jerome Powell, in his annual policy speech at the Jackson Hole, Wyoming summit this August, joked about “the good ship Transitory” and all the passengers it had in the early days of the inflation run-up.



Obviously, inflation wasn’t transitory, and the all-items CPI reading is up 18.8% since then. Food inflation has surged 22%. Eggs are up 87%, auto insurance has soared almost 47% and gasoline, though on a downward trajectory these days, is still up 16% from then. And, of course, there’s housing: The median home price has jumped 16% since Q1 of 2021 and 30% from the beginning of the pandemic-fueled buying frenzy.



Finally, while some broad measures of inflation such as CPI and PCE are pulling back, others show stubbornness.



For instance, the Atlanta Fed’s measure of “sticky price” inflation — think rent, insurance and medical care — was still running at a 4% rate in September even as “flexible CPI,” which includes food, energy and vehicle costs, was in outright deflation at -2.1%. That means that prices that don’t change a lot are still high, while those that do, in this particular case gasoline, are falling but could turn the other way.



The sticky-price measure also brings up another important point: “Core” inflation that excludes food and energy prices, which fluctuate more than other items, was still at 3.3% in September by the CPI measure and 2.7% in August as gauged by the PCE index.



While Fed officials lately have been talking more about headline numbers, historically they’ve considered core a better measure of long-run trends. That makes the inflation data even more troublesome.



<h2 class="wp-block-heading"><a></a>Borrowing to pay higher prices</h2>



Prior to the 2021 spike, American consumers had grown accustomed to negligible inflation. Even so, during the current run, they have continued to spend, spend and spend some more despite all the grumbling about the soaring cost of living.



In the second quarter, consumer spending equaled close to $20 trillion at an annualized pace, according to the Bureau of Economic Analysis. In September, retail sales increased a larger-than-expected 0.4%, with the group that feeds directly into gross domestic product calculations up 0.7%. However, year-over-year spending increased just 1.7%, below the 2.4% CPI inflation rate.



A growing portion of spending has come through IOUs of various forms.



Household debt totaled $20.2 trillion through the second quarter of this year, up $3.25 trillion, or 19%, from when inflation started spiking in Q1 of 2021, according to Federal Reserve data. In the second quarter of this year, household debt rose 3.2%, the biggest increase since Q3 of 2022.



So far, the rising debt hasn’t proved to be a major problem, but it’s getting there.



The current debt delinquency rate is at 2.74%, the highest in nearly 12 years though still slightly below the long-term average of around 3% in Fed data going back to 1987. However, a recent New York Fed survey showed that the perceived probability of missing a minimum debt payment over the next three months jumped to 14.2% of respondents, the highest level since April 2020.



And it’s not just consumers who are racking up credit.



Small business credit card usage has continued to tick higher, up more than 20% compared to pre-pandemic levels and nearing the highest in a decade, according to Bank of America. The bank’s economists expect the pressure could ease as the Fed lowers interest rates, though the magnitude of the cuts could come into question if inflation proves sticky.



In fact, the one bright spot of the small business story relative to credit balances is that they actually haven’t kept up with the 23% inflation increase going back to 2019, according to BofA.



Broadly speaking, though, sentiment is downbeat at small firms. The September survey from the National Federation of Independent Business showed that 23% of respondents still see inflation as their main problem, again the top issue for members.



<h2 class="wp-block-heading"><a></a>The Fed’s choice</h2>



Amid the swirling currents of the good news/bad news inflation picture, the Fed has an important decision to make at its Nov. 6-7 policy meeting.



Since policymakers in September voted to lower their baseline interest rate by half a percentage point, or 50 basis points, markets have acted curiously. Rather than price in lower rates ahead, they’ve begun to indicate a higher trajectory.



The rate on a 30-year fixed mortgage, for instance, has climbed about 40 basis points since the cut, according to Freddie Mac. The 10-year Treasury yield has moved up by a similar amount, and the 5-year breakeven rate, a bond market inflation gauge that measures the 5-year government note against the Treasury Inflation Protected Security of the same duration, has moved up about a quarter point and recently was at its highest level since early July.



SMBC Nikko Securities has been a lone voice on Wall Street encouraging the Fed to take a break from cuts until it can gain greater clarity about the current situation. The firm’s position has been that with stock market prices eclipsing new records as the Fed has shifted into easing mode, softening financial conditions threaten to push inflation back up. (Atlanta Fed President Raphael Bostic recently indicated that a November pause is a possibility he’s considering.)



“For Fed policymakers, lower interest rates are likely to further ease financial conditions, thereby boosting the wealth effect through higher equity prices. Meanwhile, a fraught inflationary backdrop should persist,” SMBC chief economist Joseph LaVorgna, who was a senior economist in the Donald Trump White House, wrote in a note Friday.



That leaves folks like the young man who Daly, the San Francisco Fed president, encountered uneasy about the future and hinting whether the Fed perhaps is making a policy mistake.



“I think we can move towards [a world] where people have time to catch up and then get ahead,” Daly said during her talk in New York. “That is, I told the young father on the sidewalk, my version of victory, and that’s when I will consider the job done.”

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Here’s why inflation may look like it’s easing but is still a huge problem

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1-820x461.jpeg" alt="" class="wp-image-544690" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107077973-1655689250819-gettyimages-1402870855-vcg111387492036-1.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">China’s central bank supplied 14-day cash to its banking system for the first time in months on Monday and at a lower interest rate, signaling its intent to further ease monetary conditions. Jiang Qiming | China News Service | Getty Images</figcaption></figure>



China on Monday lowered its main benchmark lending rates by 25 basis points at the monthly fixing.



The one-year loan prime rate (LPR) has been cut to 3.1%, while the five-year LPR has been trimmed to 3.6%, the People’s Bank of China (PBOC) said.



The one-year LPR influences corporate loans and most household loans in China, while the five-year LPR serves as a benchmark for mortgage rates.



The move was expected. China’s central bank governor Pan Gongsheng had indicated on Friday during a forum held in Beijing that the loan prime benchmark rates would be lowered by 20 to 25 basis points.



During the forum, Pan also said that the amount of cash that banks need to have on hand, also known as the reserve requirement ratio or RRR, could be lowered by another 25 to 50 basis points by the end of the year, depending on the liquidity situation.



The seven-day reverse repurchase rate will be cut by 20 basis points, while the medium-term lending facility rate will be lowered by 30 basis points, Pan also highlighted.&nbsp;



While the loan prime rate cuts were expected, it does confirm that monetary stimulus is at least “occurring on a significant basis in China,” said Shane Oliver, head of investment strategy and chief economist at AMP. However, he noted that the cut alone is insufficient to lift the country’s economy, reiterating growing calls for more fiscal stimulus.



“The cost of money, the supply of money, is not the real issue in China. The real issue is a lack of demand, and that’s why I think fiscal stimulus is so important,” he added.



Despite recent cuts, the real interest rate in China is still “too high,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “I expect more rate cuts next year as the Fed rate declines.”



Last month, China’s central bank trimmed its reserve requirement ratio 50 basis points. The move came as the PBOC released a blitz of support measures aimed at shoring up the world’s second largest economy, which is facing a prolonged property crisis and weak consumer sentiment.



China surprised the markets by shaving its major short and long term lending rates in July.



Last week, China reported slightly better than expected third-quarter GDP growth of 4.6% year-on-year. Additional data released on Friday, including retail sales and industrial production for September, had also beat expectations, a hopeful sign for the country’s flagging economy.



—CNBC’s Evelyn Cheng contributed to this report.

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China cuts benchmark lending rates by 25 basis points

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="960" height="503" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/WY6G22MR2FISHBZ2DHXCZR57HY.avif" alt="" class="wp-image-543693"/><figcaption class="wp-element-caption">World Bank President Ajay Banga looks on during an interview with Reuters in Washington, U.S., October 15, 2024. REUTERS/Nathan Howard/File Photo</figcaption></figure>



WASHINGTON, Oct 17 (Reuters)&nbsp;&#8211;&nbsp;World Bank President Ajay Banga said on Thursday that bilateral&nbsp;and Paris Club commercial&nbsp;creditors need to provide more debt forgiveness to&nbsp;poor&nbsp;debt-distressed countries, and that the development lender was working on ways to ease service costs to improve development outcomes.



Banga, speaking to reporters ahead of World Bank and International Monetary Fund annual meetings&nbsp;next week, said the bank has already answered calls for its share of debt relief in restructurings by providing billions of dollars in additional grants and deeply discounted loans to debtor countries.



Some $16 billion to $17 billion has gone to Zambia, Chad, Ethiopia and Ghana during their slow and painful debt restructuring processes.



&#8220;Effectively, what we&#8217;re doing is giving them the lifeline they need, whether you do it as a debt forgiveness or you give them a grant,&#8221; Banga said. &#8220;Debt forgiveness is required, but not from us. It&#8217;s required from those creditors. That&#8217;s the issue we&#8217;re trying to work our way through.&#8221;



Banga did not specifically mention China, which has been among the largest creditors to debt-distressed countries and has been slow to agree to reductions in debt principal.



Banga said that the World Bank was working with several countries on potential ways to re-profile debt to reduce servicing costs &#8220;and take the distance and put it into development, life, education, what you would call a debt-for- development swap.&#8221;



(Reporting by David Lawder; Editing by Chizu Nomiyama and Mark Porter)

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World Bank’s Banga says more bilateral, commercial debt forgiveness needed

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="545" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-820x545.jpg" alt="" class="wp-image-543673" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-820x545.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-768x511.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-1536x1022.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/QDD6H7MOFZI2NGIGHSUVQUYPO4-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A view shows banners with the logo of the annual BRICS summit near the Kazan Kremlin and the Kul Sharif Mosque in Kazan, Russia October 17, 2024. REUTERS/Alexey Nasyrov</figcaption></figure>



MOSCOW, Oct 18 (Reuters)&nbsp;&#8211;&nbsp;The BRICS group will generate most of the global economic growth in the coming years thanks to its size and relatively fast growth compared with that of&nbsp;developed Western&nbsp;nations, Russian President Vladimir Putin said on Friday.



Putin hopes to build up BRICS &#8211; which has expanded to include Egypt, Ethiopia, Iran and the United Arab Emirates as well as Brazil, Russia, India, China and South Africa &#8211; as a powerful counterweight to the West in global politics and trade.



The Kremlin leader is due to host a BRICS summit in the Russian city of Kazan on Oct. 22-24.



&#8220;The countries in our association are essentially the drivers of global economic growth. In the foreseeable future, BRICS will generate the main increase in global GDP,&#8221; Putin told officials and businessmen at BRICS business forum in Moscow.



&#8220;The economic growth of BRICS members will increasingly depend less on external influence or interference. This is essentially economic sovereignty,&#8221; Putin added.



Next week&#8217;s summit is being presented by Moscow as evidence that Western efforts to isolate Russia over its actions in Ukraine have failed.



Russia wants other countries to work with it to overhaul the global financial system and end the dominance of the U.S. dollar.



China, India and the UAE confirmed on Friday that their leaders&nbsp;would&nbsp;attend&nbsp;the&nbsp;summit&nbsp;in Kazan.



Putin cited some of the&nbsp;initiatives&nbsp;that Russia has previously outlined ahead of the summit, including a joint cross-border payments system and a reinsurance company.



He called on the New Development Bank, the BRICS&#8217; only functioning multilateral development institution, to invest in technology and infrastructure across the countries of the Global South.



&#8220;As a development institution, the bank already serves as an alternative to many Western financial mechanisms, and we will naturally continue to develop it,&#8221; Putin said. He called for more investment in e-commerce and artificial intelligence.



Putin sought to promote Russia&#8217;s new transport megaprojects such as the Arctic Sea Route and the North-to-South corridor, linking Russia to the Gulf and Indian Ocean through the Caspian Sea and Iran.



&#8220;It is the key to increasing freight transportation between the Eurasian and African continents,&#8221; he said.



(Reporting by Oksana Kobzeva and Gleb Bryanski; Editing by Gareth Jones)

Views of Kazan ahead of BRICS summit

Putin says BRICS will generate most of global economic growth

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P-820x461.jpeg" alt="" class="wp-image-543550" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107275254-1690166741957-gettyimages-1171298060-AFP_1KN77P.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">China has announced in the past week a series of measures aimed at boosting its economy ahead of a key Politburo meeting later this week focused on reviewing the first half performance of the world’s second-largest economy. Str | Afp | Getty Images</figcaption></figure>



China’s National Bureau of Statistics on Friday reported third-quarter GDP growth of 4.6% year on year, slightly exceeding the 4.5% expected by economists polled by Reuters.



That’s less than the second-quarter growth of 4.7% year on year. On a quarterly basis, the third quarter saw 0.9% expansion, compared to 0.7% in the second quarter.



“The national economy showed positive signs of growth in September,” Sheng Laiyun, the bureau’s deputy commissioner, said at the press conference, according to CNBC’s translation of the Chinese. “The confidence is building up to hit the full-year growth target of around 5%.”



Other data released on Friday, such as retail sales and industrial production, had also beat expectations, a hopeful sign for the world’s second largest economy.



Beijing has faced growing public scrutiny over its ability to meet its own annual growth target of “around 5%.”



“Since real GDP expanded by 4.8% in the first three quarters of the year, the full year GDP growth target of around 5%&nbsp;is now within reach with extra stimulus in&nbsp;Q4,” said Tianchen Xu, senior economist at The Economist Intelligence Unit.



“Despite the multitude of challenges, China’s economy is not incurable as some would suggest,” Xu added. “There’s reason to be more optimistic about growth in the coming years, given how the government is committed to shoring up the economy.”



After the release of a slew of disappointing economic data, Chinese officials last month announced a slate of support measures to jumpstart its sluggish economy, including cutting the amount of cash the banks needs to have on hand by 50 basis points.



Authorities continued to dip feed more stimulus measures throughout this month amid low consumer sentiment and a flagging property sector. Over the weekend, China’s Minister of Finance Lan Fo’an told reporters that the central government has room to increase debt and the deficit, without giving any details on the size of the package.



Mainland China’s CSI 300 was trading up 0.7% and Hong Kong’s Hang Seng index was up 1.3% following Friday’s data release.



Bruce Pang, chief economist and head of research for Greater China at JLL, said that the performance of the economy “aligns with market expectations, given the weak domestic demand, a still struggling housing market, and slowing export growth.”

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China reports third-quarter GDP growth of 4.6%, slightly beating expectations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-820x547.jpg" alt="" class="wp-image-543347" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/B22ZLQJJS5KOTFCF5CQ5IIGGIQ-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">World Bank President Ajay Banga speaks on the second day of the annual meeting of the International Monetary Fund and the World Bank, following last month&#8217;s deadly earthquake, in Marrakech, Morocco, October 10, 2023. REUTERS/Susana Vera</figcaption></figure>



WASHINGTON, Oct 17 (Reuters)&nbsp;&#8211;&nbsp;World Bank President Ajay Banga said on Thursday that bilateral creditors need to provide more debt forgiveness to&nbsp;poor&nbsp;debt-distressed countries, and that the development lender was working on ways to ease service costs to improve development outcomes.



Banga, speaking to reporters ahead of World Bank and International Monetary Fund annual meetings&nbsp;next week, said the bank has already answered calls for its share of debt relief in restructurings by providing billions of dollars in additional grants and deeply discounted loans to debtor countries.



Some $16 billion to $17 billion has gone to Zambia, Chad, Ethiopia and Ghana during their slow and painful debt restructuring processes.



&#8220;Effectively, what we&#8217;re doing is giving them the lifeline they need, whether you do it as a debt forgiveness or you give them a grant,&#8221; Banga said. &#8220;Debt forgiveness is required, but not from us. It&#8217;s required from those creditors. That&#8217;s the issue we&#8217;re trying to work our way through.&#8221;



Banga did not specifically mention China, which has been among the largest creditors to debt-distressed countries and has been slow to agree to reductions in debt principal.



Banga said that the World Bank was working with several countries on potential ways to re-profile debt to reduce servicing costs &#8220;and take the distance and put it into development, life, education, what you would call a debt-for- development swap.&#8221;



(Reporting by David Lawder; Editing by Chizu Nomiyamaand Mark Porter)

Second day of the International Monetary Fund and the World Bank meeting in Marrakech

World Bank’s Banga says more bilateral debt forgiveness needed

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB-820x461.jpeg" alt="" class="wp-image-543281" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048848-1729142200339-gettyimages-2170767629-GERMANY_ECB.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Christine Lagarde, president of the European Central Bank (ECB), left, and Wolfgang Proissl, director of general communications at the European Central Bank (ECB), at a rates decision news conference in Frankfurt, Germany, on Thursday, Sept. 12, 2024.  Bloomberg | Bloomberg | Getty Images</figcaption></figure>



The European Central Bank is widely expected to announce its third interest rate cut of the year at its Thursday meeting, after policymakers flagged reduced inflation risks and a weakening growth outlook.



Headline price rises in the euro area eased to 1.8% in September, coming in below the central bank’s 2% target for the first time in three years.



A cut on Thursday would see the ECB reducing rates at consecutive meetings for the first time since December 2011.



Expectations for a faster pace of monetary easing have built since the ECB’s Sept. 12 meeting, when market pricing suggested just one more rate cut this year, rather than the two priced in as of Thursday morning.



Along with the latest inflation print on Oct. 1, that shift in sentiment has come amid dovish comments from various ECB members. ECB President Christine Lagarde also swayed markets, when she said the latest data readings “strengthen our confidence that inflation will return to target in a timely manner.”



Another key factor is the euro zone growth outlook. The ECB trimmed its euro zone growth forecast for 2024 last month on the back of weaker domestic demand, now projecting an 0.8% GDP rise, compared with 0.9% previously. Some of its biggest economies continue to face major challenges, including manufacturing weakness in Germany and a huge fiscal consolidation project looming in France; while sentiment indicators remain weak.

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European Central Bank set for first back-to-back interest rate cut in 13 years

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079-820x461.jpeg" alt="" class="wp-image-543173" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108048818-1729133179349-gettyimages-2061912118-20090101240309-99-276079.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">09 March 2024, China, Peking: Ni Hong (r.), China’s Minister of Housing and Rural Development, speaks at a press conference.  Johannes Neudecker | Picture Alliance | Getty Images</figcaption></figure>



China will expand its “whitelist” of real estate projects and speed up bank lending for these unfinished developments to 4 trillion yuan ($561.8 billion) by the end of the year, the country’s housing ministry said Thursday.



Ni Hong, China’s minister of housing and urban-rural development, made the announcement at a press conference, alongside officials from the central bank, finance ministry and the National Financial Regulatory Administration.



A total of 2.23 trillion yuan had already been approved in loans to whitelisted developers. That figure will almost double to 4 trillion yuan by the end of 2024, according to a senior official from the financial regulatory administration.



Launched in January, China’s “whitelist” initiative allows city governments to recommend residential projects to banks for speedier lending. The intent was to ensure the completion of unfinished housing projects so they could finally be delivered to buyers.



All commercial housing projects are now eligible for the “whitelist” project, Xiao Yuanqi, vice minister of the administration said Thursday. The move is expected to broaden the list.



Xiao also stressed that banks should deploy funds “as soon as possible,” saying they could release the loans in full to developers rather than in tranches, according to CNBC’s translation of the Chinese.



The briefing was the latest in a series of high-level government policy announcements aimed at bolstering the economy.



In late September, Pan Gongsheng, the People Bank of China governor announced a 50 basis-point cut to the amount of cash banks need to have on hand, known as the reserve requirement ratio or RRR. He also lowered the minimum down payment for second-home loans nationwide from 25 percent to 15 percent.



Days later, officials in a top-level meeting, chaired by Chinese president Xi Jinping, pledged to “halt the real estate market decline and spur a stable recovery.”



<h3 class="wp-block-heading" id="h-disappointing-briefing">Disappointing briefing?</h3>



The officials on Thursday’s briefing appeared to be mostly “fine-tuning existing policies,” Bruce Pang, chief economist and head of research of Greater China at JLL, said. “It will take time for the improvement on sales volumes and prices to be translated into property investment and construction.”&nbsp;



Some investors saw the recent flurry of activity as a sign that Beijing was finally ready to take drastic measures to stimulate growth, and they had hoped for more stimulus measures from the briefing. As Xiao was speaking, Chinese CSI 300 real estate index dropped over 5%, in a sharp turnaround from gains of around 8.7% in the previous three trading sessions.



Volatility in the Chinese stock market is likely to continue as investors “lack conviction that the stimulus package and what’s been announced is going to turn around things,” said Chi Lo, senior economist at BNP Paribas Asset Management.



Over the weekend, officials from China’s Ministry of Finance announced that they would allow local governments to issue more special bonds for land purchases and allow affordable housing subsidies to be used for existing housing inventory, instead of only new construction.



Chinese property stocks soared on Monday off the news, with the Hang Seng Mainland Properties Index rising over 2%. Real estate was also the leading gainer in Mainland China’s CSI 300, advancing by nearly 5%.



From its peak in 2020, the HSMPI has lost more than 80%. In May, Ni told reporters at a press conference that developers “that must go bankrupt, should go bankrupt, or be restructured.”



<h3 class="wp-block-heading">Real estate slump</h3>



More than 50 cities across China have introduced policies to boost the real estate market, according to state media, citing the housing ministry.



Ahead of the Golden Week holiday, the city of Guangzhou announced it will remove all&nbsp;restrictions on home purchases. Meanwhile the governments of Beijing, Shanghai, Shenzhen moved to ease homebuying restrictions by non-local buyers and lowered the minimum down-payment ratios.



The slew of measures came after China’s previous measures had led to little meaningful rebounds. New home prices in August dropped at the fastest pace in more than nine years, according to the National Bureau of Statistics data.



The value of new homes sold fell by 23.6% for the year through August, slightly better than the 24.3% drop year-to-date as of July. Average home prices fell by 6.8% in August from the prior month on a seasonally adjusted basis, according to Goldman Sachs.



The real estate sector — once accounted for more than a quarter of China’s economy — had been in a painful downturn since 2021, when Beijing launched a crackdown on the sector’s high debt levels, sending a slew of developers to default on their debts and leave many housing projects unfinished. That had severely dampened homebuyers confidence in the market.



— CNBC’s Evelyn Cheng contributed to this story.

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China pledges more financial support for ‘whitelist’ real estate projects

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447-820x461.jpeg" alt="" class="wp-image-542016" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108046955-1728864181139-gettyimages-2177123447-2177123447.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A shipping container and gantry cranes at the Yangshan Deepwater Port in Shanghai, China, on Thursday, Oct. 10, 2024. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



BEIJING — China’s exports grew by 2.4% in September from a year ago in U.S. dollar terms, while imports rose by 0.3%, customs data showed Monday.



Both figures were well below expectations. China’s exports were forecast to have risen by 6% year-on-year in September in U.S. dollar terms, according to a Reuters poll. That would be slower than the 8.7% increase in August.



Imports were expected to have climbed by 0.9% in September from a year ago, according to the Reuters poll. That would be slightly faster than the 0.5% increase in August.



Exports have been a bright spot in China’s economy, which has otherwise been weighed down by lackluster consumer spending and a real estate slump.



Inflation data out Sunday pointed to further weakness in domestic demand.



The core consumer price index, which strips out more volatile food and energy prices, rose by 0.1% in September from a year ago. That’s the slowest since February 2021, according to the Wind Information database. Tourism-related prices fell by 2.1% year-on-year, despite the Mid-Autumn Festival in September and Golden Week holiday that kicked off Oct. 1.



China’s National Bureau of Statistics is scheduled to release third-quarter GDP on Friday, along with retail sales, industrial production and fixed asset investment for September.



Chinese authorities have ramped up stimulus announcements since late last month, while so far falling short on the fiscal policy details many investors have hoped for. Stocks in China have swung wildly as beaten-down markets debate the ultimate impact of Beijing’s economic support.



This is a breaking news story. Please check back for updates.

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China’s exports and imports grew far less than expected in September

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443-820x461.jpeg" alt="" class="wp-image-540935" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/108045816-1728543680505-gettyimages-1046968880-hv6b7443.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Alexander Spatari | Moment | Getty Images</figcaption></figure>



LONDON — The U.K. economy returned to growth in August following two consecutive months of stagnation, providing a slight boost as the Labour government prepares to deliver its first budget later this month.



The economy grew 0.2% on a month-on-month basis, flash figures published by the Office for National Statistics showed Friday, meeting expectations of economists polled by Reuters.



It follows an economic flatlining in June and July after the U.K. recorded modest but steady expansion in almost every month this year. Britain emerged from a shallow recession at the start of the year.



Over the three months to August, Britain’s economic growth also expanded 0.2%, compared with the 0.5% recorded in the three months to July.



“The UK economy had a remarkable run through the first few months of 2024, at least if the monthly GDP figures are to be believed. But those same figures now show that this strength was short-lived,” ING’s Developed Markets Economist James Smith said in a note shortly after the release.



“The bottom line is that the economy still seems to be growing at a reasonable pace, but the 0.6/0.7% quarterly GDP readings we became accustomed to in the first two quarters of the year are not going to be repeated in the second half of the year. We’re looking for 0.2% growth in the third quarter overall.”



Sterling rose slightly against the U.S. dollar following the release, trading up 0.05% at $1.3067 by 8:56 a.m. London time. U.K. government bond yields, meanwhile, ticked lower, with the 10-year trading around 4.211%, having climbed sharply over recent days.



The U.K.’s dominant services sector showed slight growth of 0.1% in the month to August, while production and construction output rose by 0.5% and 0.4%, respectively.



Finance Minister Rachel Reeves welcomed the data, saying returning the economy to growth is the government’s “number one priority.”



“While change will not happen overnight, we are not wasting any time on delivering on the promise of change,” she said in a statement. The new Labour administration was voted into power in July during snap elections.



<h2 class="wp-block-heading" id="h-all-eyes-on-the-budget"><a></a>All eyes on the budget</h2>



The reading comes as Reeves is set to deliver her Autumn Budget at the end of this month, with tax hikes and spending cuts expected as she tries to overcome an estimated £22 billion ($29 billion) black hole in the public finances. The Conservative opposition party, which led the country until snap elections earlier this year, deny the gap.



ING’s Smith said that if the U.K. Treasury was hoping the strong growth in the first half of the year would unlock some “extra fiscal headroom” in the budget, “it is likely to be left disappointed.”



“Remember the key here is what the Office for Budget Responsibility projects for the UK economy. And like the BoE, they are unlikely to take much inference from the GDP figures so far this year. Indeed, if anything the OBR forecasts already sit at the more optimistic end of the spectrum,” he added.



The government is pitching its vision for an era of “national renewal,” as it attempts to inject some optimism into the public psyche after painting a gloomy picture of the state of the economy.



Lindsay James, investment strategist at Quilter Investors, said Reeves faces a “tricky balancing” to ensure her decisions don’t stifle further economic growth.



“With interest rates beginning to fall, the responsibility has shifted from the Bank of England to Rachel Reeves, who must now make critical fiscal decisions. She and the Prime Minister have indicated that ‘pain’ is necessary for future prosperity, but there is a real risk of overcorrection at the expense of economic growth,” she said.

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UK economy returns to growth as Labour tees up all-important budget

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING-820x461.jpeg" alt="" class="wp-image-540904" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/10/107071349-1654502627151-gettyimages-1233078794-CHINA_BEIJING.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">China’s Ministry of Finance, pictured here in Beijing in 2021, is refunding taxes and cutting fees to support economic growth. Yan Cong | Bloomberg | Getty Images</figcaption></figure>



Investors are on tenterhooks as Beijing prepares to deliver fresh policies over the weekend that could jumpstart its economy.



China’s Finance Minister Lan Fo’an is set to hold a press conference at 10 a.m. on Saturday local time on “intensifying” fiscal stimulus policies, the country’s State Council Information Office said.



With Beijing at risk of missing its full year economic growth target of 5%, some analysts are confident that authorities are ready to deliver major fiscal stimulus at the highly anticipated event, while others remain skeptical.



<h2 class="wp-block-heading" id="h-investors-on-edge"><a></a>Investors on edge</h2>



Investors had expected a fresh package to be announced during the National Development and Reform Commission’s press conference on Tuesday, which was held shortly after markets reopened following a weeklong holiday.



During that event, the chair of NDRC pledged a raft of actions to bolster the economy. But Zheng Shanjie stopped short of announcing any new major stimulus plans.



The move underwhelmed investors and sent a lengthy rally in the mainland Chinese markets into days of volatility.



With this second shot, the Chinese government has now realized that it’s facing a “whatever it takes moment” and it will do “whatever that is necessary to stop the bleeding of the economy, and to get things moving,” Chen Zhao, chief global strategist at Alpine Macro, told CNBC’s “Squawk Box Asia.”



Authorities are likely to affirm that at the press conference on Saturday, Zhao said.



Before the Golden Week holiday, Chinese officials unveiled a flurry of stimulus policies, including interest rate cuts, lower cash reserve requirements at banks, looser property purchase rules and liquidity support for stock markets.



Many investors and analysts viewed the move as a signal that Beijing was finally ready to take drastic action to revive its ailing economy, following a barrage of disappointing data and amid a slump in consumer confidence. At the time, Chinese major indexes began to rally, surging over 25% as investors cheered on the slate of stimulus measures.



Most economists expect some sort of additional stimulus this weekend, but there are many differing views on its size as well as the priorities of the package.&nbsp;Some have floated a figure between two and three trillion yuan (the equivalent of $282.8 billion to $424.2 billion), while others have suggested 10 trillion yuan ($1.4 trillion).



Speaking to “Street Signs Asia,” Chetan Ahya, chief Asia economist at Morgan Stanley, said the package will likely be focused on stimulating domestic demand, supporting recapitalization of banks, as well as local government debt restructuring.



The consumer stimulus measures could be targeted at social welfare spending, with an aim to free up more household savings, he said. And a small portion of the package could be dedicated to support consumer trade-in programs.



In a note, economists at Morgan Stanley predicted that China’s Ministry of Finance will deliver a modest supplementary fiscal package at the press conference — which they called “Beijing’s second chance to convince the market” after it undershoot earlier this week. However, the economists conceded that expectations are high.



“Higher size with clear consumption stimulus portion, or clear forward guidance for next year’s expansionary policy, would constitute a positive surprise,” the Morgan Stanley economists wrote.



Forward guidance on 2025 is critical and we expect another two to three trillion yuan widening in the augmented deficit but don’t think the size will be announced before end of 2024, they added.



<h2 class="wp-block-heading">In the trillions</h2>



Beijing needs to announce 10 trillion yuan in fiscal stimulus that’s focused on boosting consumption and removing large inventory in the property market, Morgan Stanley’s Ahya said.



“That’s not what we are saying they will do” but they need something like that “to get the economy out of deflation and ultimately create a sustained turn around in investors’ confidence,” he continued.



Beijing could be wary that an enormous stimulus package may send a signal to the public that there are more severe underlying economic problems, so they could phase them out into piecemeal announcements, Ahya added.&nbsp;&nbsp;



This time round, Ting Lu, chief economist at Nomura, expects the finance ministry will announce a package no larger than 3% of China’s GDP, which grew 5.2% to 126 trillion yuan in 2023.&nbsp;



The ministry may discuss additional funding through the issuance of government bonds, but the exact numbers could come later this month at the National People’s Congress’ standing committee meeting, Lu said. The NPC standing committee is China’s top legislature.



Reuters reported in late September that China had plans to issue special sovereign bonds worth about 2 trillion yuan ($284.42 billion) this year, with 1 trillion yuan primarily to revive domestic consumption and the other half to support local governments’ debt problems. 



A two trillion yuan bond issuance is unlikely to turn the economy around, said Alpine Macro’s Zhao, who believes that the next stimulus package needs to be around 4-5% of GDP to reverse lackluster consumption demand.&nbsp;



“The Chinese government is already backed to the corner, they are panicking. These are good things from the stock market’s point of view,” he said, insisting that the finance ministry will unveil a package on Saturday that could be “sufficient enough to make a bottom for the economy.”&nbsp;



But, a Chinese political veteran has cautioned that changes in fiscal policy needs to go through lengthy legal processes for approval, dampening Zhao’s hopes for this weekend.



Dong Yu, a former official on China’s top economic planning committee who now serves as vice president of China Institute for Development Planning at Tsinghua University, told local media in an article published Thursday that a fiscal stimulus package worth trillions of yuan will eventually come, but people need to “practice some patience.”

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International

China gears up for a big week as markets await U.S. elections and stimulus details

Euro zone inflation rises to higher-than-expected 2%, weakening case for jumbo rate cut

China’s factory activity expands for the first time since April, official survey shows

Britain’s Labour government to deliver debut Budget this week, settling weeks of uncertainty

Oil prices slide more than 4% after Israel’s ‘limited’ attack on Iran seen as not disrupting supplies

‘New bullish phase’? As gold hits another high, analysts say more records are in sight

Here’s why inflation may look like it’s easing but is still a huge problem

China cuts benchmark lending rates by 25 basis points

World Bank’s Banga says more bilateral, commercial debt forgiveness needed

Putin says BRICS will generate most of global economic growth

China reports third-quarter GDP growth of 4.6%, slightly beating expectations

World Bank’s Banga says more bilateral debt forgiveness needed

European Central Bank set for first back-to-back interest rate cut in 13 years

China pledges more financial support for ‘whitelist’ real estate projects

China’s exports and imports grew far less than expected in September

UK economy returns to growth as Labour tees up all-important budget

China’s ‘whatever it takes’ moment? Investors hope for hundreds of billions in new stimulus

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