Having shown incredible economic growth after the first wave of the pandemic, China’s economy has slowed down abruptly. China’s GDP for the second quarter totaled 7.9%, undershooting the forecast of authorities and surveyed economists. They expected the reading to amount to at least 8.1%.
A breathtaking rise logged early this year was followed by an equally sharp decline. In the first quarter of this year, GDP surged by 18.3% year-on-year. Naturally, few experts are anticipating similar results from the second quarter. However, more or less, many analysts were betting on a high figure.
UOB economist Voei Chen noted that the reading was slightly below market expectations. He also added that the difference between the two indicators was rather noticeable.
In June, there was a decline in indicators in almost all industries, especially in retail sales, industrial production volumes, and the construction industry. Remarkably, unlike economists, speculators were not taken aback by weak data. They feared a steeper slowdown due to the easing of monetary policy by the central bank to support the economy. Earlier, the regulator cut the reserve requirement ratio (RRR) for financial institutions by 0.5 percentage points. It released 1 trillion yuan worth of liquidity into the interbank system to provide small Chinese businesses with more credit. Many experts considered this decision rather controversial as they expected the regulator to normalize the policy amid high GDP growth rates. If the central bank was meant to create a cushion, it could indicate serious difficulties that the watchdog may face when returning to stimulating measures in case of the new virus outbreak.
Experts believe that the slowdown in the economic recovery of China may cast a shadow on the global economy as well.
