China’s economic growth slowed sharply in the second quarter, up just 0.4% from a year earlier, below expectations, showed official data released late Thursday night (14), Brasília time. . The country’s industrial activity and consumer spending have been affected by widespread lockdowns to contain record Covid-19 cases.
Analysts polled by Reuters had expected China’s GDP (Gross Domestic Product) to grow by 1.0% in the period, down significantly from 4.8% in the first quarter.
On a quarterly basis, GDP fell 2.6% in the second quarter, compared with expectations for a 1.5% drop and a revised 1.4% gain in the previous quarter.
In the first half of the year, GDP grew by 2.5%, well below the government’s target of 5.5% for this year.
“China’s economy was on the brink of stagflation, although the worst was over in the May-June period. We can rule out the possibility of a recession or two straight quarters of contraction,” said Toru Nishihama, chief economist at Dai-ichi. Life Research Institute in Tokyo.
“Given the moderate growth, the government of China is likely to implement economic stimulus measures from now on to accelerate its growth, but the hurdles are high for the PBoC [banco central da China] cut interest rates further, as this would increase inflation, which has been kept relatively low at the time. “
Full or partial lockdowns were imposed in the country’s major cities in March and April, including the Shanghai shopping center, which contracted 13.7% of GDP in the second quarter, year-on-year.
While many of the restrictions have been lifted and the June data signaled an improvement, analysts do not expect a quick economic recovery. China is sticking to its tough ‘Covid zero’ policy amid new outbreaks, the country’s property market is in a deep slump and global prospects are worsening.
A Reuters poll predicts China’s growth will slow to 4.0% in 2022, far below the official growth target of around 5.5%.
The country’s industrial production grew 3.9% in June from a year earlier, accelerating from a 0.7% increase in May as activity began to recover from months of Covid lockdowns.
The expansion was weaker than analysts polled by Reuters, who had forecast growth of 4.1%.
Retail sales rose 3.1% after the easing of restrictions. Analysts had expected a result of 0%, after falling 6.7% in May.
Fixed asset investment grew 6.1% in the first six months of the year compared to the same period a year ago, compared with a forecast of 6.0%. Between January and May the high was 6.2%.
The employment situation improved, with the unemployment rate falling to 5.5% in June from 5.9% in May, as the economy recovered.
Data showed that home prices fell 0.5% from a year earlier, worsening from a 0.1% drop the previous month. There was also no increase in the monthly variation.
China’s real estate investment also fell 5.4% in the first half of 2022 year-on-year, after a 4.0% decline in the first five months.
On Wednesday, the central bank pledged to keep liquidity reasonably high and reduce funding costs, anticipating a temporary increase in the overall level of debt amid efforts to revive the economy.
Analysts believe room for the central bank to further loosen its policy may be limited by concerns about capital outflows as the US Federal Reserve aggressively raises interest rates to fight rising inflation.
The rise in consumer prices in China, while not as high as elsewhere, could also lift restrictions on monetary policy easing. Many analysts expect consumer inflation to rise and exceed the 3% annual target for the indicator in the coming months, but the full-year average level is still expected to remain within target range.
Translation by Marcelo Azevedo
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