China’s GDP fell 2.6% month-on-month Not surprisingbut still unpopular:
figure 1: China’s real GDP, 2019Q1=1 (black), IMF April WEO forecast (sky blue square), Deutsche Bank May 17 forecast (light green), Bloomberg Economics May 20 (pink triangle) ). ECRI-defined recession dates are shaded in gray. Source: National Bureau of Statistics via Tradingeconomics.com, IMF, Deutsche Bank, Bloomberg Economics, ECRI and author’s calculations.
as i famous Three months ago, Goldman Sachs (not shown above) and Deutsche Bank both foreseen sharp declines, partly due to the government’s zero covid policy and a deteriorating real estate sector.
Garcia Herrero and Xu Zai Natixis (7/15) Note:
Looking ahead, we expect China’s economy to pick up slightly in the second half of 2022 on the back of some easing in reopening measures, but weak GDP performance in the first half of 2022, making it difficult to achieve the government’s original growth target (5.5%). We expect the Chinese government to scrutinize it downwards. Given current information, we maintain our 3.5% annual growth forecast for 2022, with some associated downside risks. First, the pandemic continues to evolve into new contagious variants, namely BA.4 and BA.5, which may pose additional challenges for China to contain the spread of Covid. Second, there is no sign of recovery in the sluggish property market. If anything, it’s going to get more complicated as the problem is shifting from developers to households, and through their mortgages, possibly to banks. Finally, the global economic environment is rapidly deteriorating as the likelihood of a global recession increases, with a particular focus on the US due to inflation and a very hawkish Federal Reserve, and Europe due to the war in Ukraine and high energy prices.
Currently, growth appears to be back in forward-looking data:
resource: Natixis, 15 July 2022.
News about challenges to China’s growth has clear implications for the global economy.from Reuters:
Weak data on Friday added to fears of a global recession, as policymakers raised interest rates to curb soaring inflation, creating more hardship for consumers and businesses around the world as they grapple with a war in Ukraine and disruptions to supply chains. challenge.
