IMPORTANT POINTS
1. The country of China created an unimpressive growth of 0.4% of their GDP, not reaching the predictions as the economy has been fighting the covid limits. Reuters polled analysts who forecast 1% growth for the second quarter.
2. Retail sales, while still suffering, showed an increase in June at a rate higher than experts had expected.
3. Covid outbreaks in mainland China peaked in the second quarter of 2020, when the pandemic was at its height.
BEIJING —
China barely grew its GDP by 0.4% from a year ago, missing expectations as the economy struggled to shake off the impact of currency controls.
According to Reuters, analysts expected a 1% growth in the second quarter.
Likewise, industrial production in June fell short of expectations, rising by 3.9% from a year ago, compared to a forecast of 4.1%.
But retail sales in June are projected to rise by 3.1%, climbing from a slump from the previous year and exceeding expectations for no growth from the previous year. Major e-commerce companies held a promotional shopping festival in the middle of last month.
June was a banner month for retail sales across many categories, with increases in automobiles, cosmetics, and medication sales. As a result, the stocks of construction, catering, and furniture stocks were decreased. Within retail sales, sales of physical goods increased 8.3% from a year ago in June, slower than the 14% growth the prior month.
The value of investment in fixed assets for the first half of the year was up 6.1% as opposed to the predicted 6%.
Fixed asset investment increased on a monthly basis in June, rising by 0.95% from May to an undisclosed figure. Infrastructure and manufacturing investments maintained a similar pace from May to June, while real estate investment slowed. In the first half of the year, real estate investments declined by 5.4% from a year ago, worse than the 4% drop during the first five months of the year.
In China’s 31 largest cities, unemployment fell from pre-pandemic highs to 5.8% in June, but is higher for the 16-24 age group, at 19.3%.
As a result of the latest economic results, the statistics bureau described them as “hard-earned achievements” but warned about the “lingering” impact of Covid and “shrinking demand” at home. In addition, the bureau noted the rising “risk of stagflation in the world economy” as well as tightening monetary policy overseas.
At a press conference Friday, statistics bureau spokesperson Fu Linghui said economic indicators in the second quarter halted a downward trend. He described the impact of Covid as “short-lived,” and emphasized how China’s inflation is far below that of the U.S. and Europe. Fu added that there are “challenges” to achieving the full-year economic targets.
china’s mainland experienced its worst Covid outbreak since the pandemic’s peak in early 2020 in the second quarter. During this time, the metropolis of Shanghai had strict orders against going outside, as well as restricted movement. As a result, there were many supply chain disruptions.
Throughout June, businesses in Shanghai, Beijing, and other regions of China have returned to normal business activity. In the last few weeks, the central government has shortened the quarantine period and eased some of the preventive measures for Covid.
Still, some Chinese might want to restore controls as new cases occur.
As of Monday, 26.5% of China’s GDP was under lockdown or heightened control, according to Nomura. That’s up from 14.9% a week earlier.
Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid controls. Among firms tracked by CNBC, the median forecast was 3.4% as of late June.
In early March, an official GDP target of “around 5.5” was announced.
“China’s economy is no doubt bottoming. But it is still in the midst of its recovery,” said Bruce Pang, chief economist and head of research, Greater China, JLL.
According to him, policymakers will maintain their easing stance for a moderate recovery in the second half of the year.
