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China Forecasts See More Spending and Greater Budget Deficit

China Forecasts See More Spending and Greater Budget Deficit

Christopher Almeida,

THE TAKEAWAY: China has budgeted spending of 13.82 trillion Yuan and a deficit of approximately 2 per cent of GDP for 2013.

China_Forecasts_See_More_Spending_and_Greater_Budget_Deficit_body_china_MOF_report.png, China Forecasts See More Spending and Greater Budget Deficit

Created Using Marketscope 2.0

China’s Ministry of Finance has projected a budget deficit of 1.2 trillion Yuan, which is an increase on a deficit of 800 billion Yuan as of 2012. This 2013 prediction will be close to 2 per cent of gross domestic product. Revenue in 2013 is forecasted to be 12.66 trillion Yuan which is 8% higher than 2012 according to the ministry’s budget forecasts. Also increased from 2012 is government spending which is predicted to be CNY13.82 trillion, a 10 per cent increase from the previous year.

An increase in spending will incorporate a continuation of proactive fiscal policies, a greater defense budget as well as more money spent on social welfare. This may see a boost in Chinese growth which could see a pickup in Australian export demand. The Australian Dollar gained some ground on the news as investors saw a potentially firmer RBA outlook and a stronger ‘Aussie’ dollar.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.