China’s economic growth slowed sharply in the second quarter, highlighting the colossal toll on activity from widespread COVID lockdowns; and pointing to persistent pressure over coming months from a darkening global outlook. Friday’s frail data adds to fears of a global recession as policymakers jack up interest rates to curb soaring inflation; heaping more hardship on consumers and businesses worldwide as they grapple with challenges from the Ukraine war and supply chain disruptions.
Thereafter, gross domestic product in the April-June quarter grew a tepid 0.4% from a year earlier; official data showed on Friday. That was the worst showing for the world’s second-biggest economy since the data series began in 1992; excluding a 6.9% contraction in the first quarter of 2020 due to the initial COVID shock. They imposed full or partial lockdowns in major centres across the country in March and April, including the commercial capital Shanghai; which saw a year-on-year contraction of 13.7% in GDP in the second quarter. Output in the capital Beijing shrank 2.9% year-on-year in the same quarter.
However, imposing new lockdowns in some cities and the highly contagious BA.5 variant. Which have heightened concerns among businesses and consumers about a prolonged period of uncertainty.
For the first half of the year, GDP grew 2.5% from a year earlier. Many believe worries about capital outflows could limit room for the central bank to ease policy further, as the U.S. Federal Reserve, and other economies, aggressively raise interest rates to fight soaring inflation.
Retail growth shows that lockdowns have been the primary drag on consumption,” said Jacob Cooke, CEO of WPIC Marketing + Technologies, in Beijing. The employment situation remained fragile. Policymakers have pledged to help local governments deliver property projects on time; and plan to boost spending on infrastructure to revive the economy. Still, the headwinds to growth suggest a hard grind ahead.
-Reuters.