(Yicai Global) June 9 -- Confidence in China’s economic performance has picked up from a two-year low plumbed in May, with chief economists polled by Yicai Global expecting the economy to improve soon as stimulus measures take effect.

The Yicai Chief Economists Confidence Index rose to 49.8 for June from 47.6 in May, remaining below the 50 mark in negative territory for the third month in a row, according to a survey of 19 leading economists in China. April’s figure was 47.8.

Policies to stabilize economic growth continue to be enhanced, after Covid-19 restrictions in parts of China, including Shanghai, brought greater pressure to bear on the world’s second-largest economy along with uncertainty overseas.

Most economic indicators will bounce back this month, according to the economists. New yuan loans will likely increase to CNY1.48 trillion (USD221.2 billion), versus CNY645.4 billion (USD96.4 billion) in April, and social financing is expected to reach CNY2.28 trillion, up by CNY912 billion on the forecast made by the People's Bank of China last month.

One of the economists said a cut in the reserve requirement ratio, the amount of cash banks must hold in reserve, is possible this month, while three said a reduction in the benchmark one-year loan prime rate is likely. Two economists forecast a further cut in the five-year LPR in June, and six foresee the possibility of a cut in the RRR targeting large financial institutions.

The survey respondents predicted the Chinese yuan to soften versus the US dollar to 6.68 by the end of June from 6.6607 on May 31, but they expect it to rebound to 6.63 by the end of this year. The yuan’s devaluation benefits exports to an extent, they generally said, adding that Vietnam's trade growth will not bring evident pressures to bear on China’s exports. In the long term, the two countries are complementary more than they are substitutes for each other, the economists said.

May’s consumer price index likely rose to 2.2 percent from a year earlier, up 0.1 percentage points from April’s rate, according to the survey results. The producer price index likely jumped 6.51 percent year on year, slowing from April’s 8 percent clip.

Retail sales of consumer goods likely sank 7.1 percent in May from a year earlier, compared with an 11.1 percent plunge the month before, the economists forecast. Industrial added value is likely to have dipped 0.5 percent, versus a 2.9 percent drop in April.

China’s exports may have jumped 6.3 percent last month, up from a 3.9 percent gain in April, and imports likely edged up 0.9 percent, after no change the previous month, according to the economists. The trade surplus was seen climbing 5 percent to USD53.7 billion.

Editors: Xu Wei, Futura Costaglione