(Bloomberg) — China’s economy grew slower than expected in the second quarter, with consumer spending notably declining in June, further sounding alarm bells over the recovery.
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Gross domestic product rose 6.3% in the second quarter from a year earlier, according to data released Monday by the National Bureau of Statistics, weaker than the median forecast of 7.1% by economists polled by Bloomberg. . The figures were skewed by a weak comparison base last year when Shanghai and other places were in lockdown.
Compared to the first quarter, GDP growth slowed to 0.8% from 2.2% in the first three months of the year.
In June alone, activity indicators showed a mixed picture of the economy:
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Retail sales growth slowed to 3.1% from 12.7% in May, missing economists’ prediction for a 3.3% jump
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Industrial production rose 4.4%, against a projected 2.5%, and 3.5% in May
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Investment in fixed assets increased by 3.8% in the first six months of the year compared to the previous year, against 4% in the period January-May, but higher than the 3.4% predicted by economists
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The urban unemployment rate remained unchanged at 5.2%
Beijing has set a target of moderate GDP growth of around 5% for this year, but faces a host of economic challenges, including the looming prospect of deflation, falling exports and a weakening market. real estate. Pressure is mounting on policymakers to provide more stimulus to the economy, including by cutting central bank interest rates and further easing property controls.
The People’s Bank of China refrained from easing policy on Monday, leaving its one-year lending rate unchanged at 2.65%, in line with economists’ expectations. Many expect the PBOC to lower the rate in the coming months.
China’s benchmark CSI 300 equity index fell 0.9% at 10:05 a.m. as Asian peers fell broadly. It was the index’s first decline in three sessions. The onshore yuan weakened 0.3% to 7.1645 to the dollar. The yield on 10-year government bonds was little changed.
The BES said in a statement that while the economy has rebounded, “the global political and economic situation is complicated, and the foundation for the recovery and development of the national economy is still not solid.”
Rising US interest rates and high debt levels in the Chinese economy have limited the central bank’s room to carry out aggressive easing measures. Some economists also argue that weak business and consumer confidence has reduced the effectiveness of monetary stimulus, calling for fiscal policy to play a bigger role in the economy.
Investors are awaiting a likely meeting of the Communist Party’s top decision-making body later in July to provide crucial clues on future economic policies.
–With help from James Mayger and Fran Wang.
(Updates with additional details)
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