(Yicai) May 8 -- Confidence in China’s economic outlook fell in May for the first time in eight months, reflecting growing concerns among chief economists about weakening external demand and the uncertainty surrounding tariff policies, according to a poll conducted by Yicai.

The Yicai Chief Economists Confidence Index slid to 49.84 this month from 50.33 in April, dropping below the key 50 level.

The new measures announced by China’s central bank governor yesterday will support the economy and bolster domestic market sentiment, according to the economists. Pan Gongsheng said the People's Bank of China rolled out 10 measures to deepen the implementation of its moderately loose monetary policy and support high-quality growth.

Pan also announced cuts in the seven-day reverse repurchase rate, a key policy rate, and the amount of cash that banks must hold in reserve, freeing up CNY1 trillion (USD138.3 billion) of long-term liquidity.

The economists expect the consumer price index to have dropped 0.2 percent last month from a year earlier, and the producer price index to have fallen 2.7 percent, marking deeper contractions compared with March's official data.

Fixed-asset investment, retail sales of consumer goods, and industrial value-added output are expected to have climbed 4.1 percent, 5.5 percent, and 5.6 percent, respectively, the economists predicted. April’s trade surplus is likely to come in at USD91.3 billion. These data are also lower than the official figures for the previous month.

They expect April's financial data to have declined from March's official figures due to seasonal factors. The average forecast for new Chinese yuan-denominated loans was CNY776.4 billion (USD107.5 billion), and for total social financing, it was CNY1.31 trillion (USD181.3 billion). 

However, the balance of M2, a broad measure of money supply that covers cash in circulation and all deposits, may have climbed 7.3 percent, higher than last  month’s reading, with the economists agreeing that monetary policy will remain accommodative.

On April 30, the yuan’s central parity rate versus the US dollar was fixed at 7.2014. The economists predict a modest appreciation this month, forecasting the midpoint rate to reach 7.18 by May 31. In addition, they revised their year-end forecast to 7.17 from the 7.21 they predicted last month.

Editor: Martin Kadiev