China’s Economy Recuperates, but Slowly  

15/06/2020

PRC’s economy is inching out of virus slump, but slower than expected. Consumers remain wary, sales continued to contract in May

 

China’s economy continued its slow recovery from the fallout of the Covid-19 pandemic in May. Latest data released Monday showed investment, consumption and industrial output all improved from the previous month, but t the gain was smaller than expected, suggesting the recovery was not as fast as economists expected.  

Industrial output growth quickened to 4.4% in May from a year earlier, the highest reading since December, official data showed on Monday. Analysts had expected a 5.0% rise from 3.9% in April, the first expansion since the virus emerged in China late last year, according to Reuters.  Analysts say signs of improvement continue to be seen in China ranging from steel production and car sales to more lights being turned on in industrial parks. However, they warn it could take many months for broader activity to return to pre-crisis levels.

 

China and the EU are ranked as the world’s two largest exporters but sit third and fifth on the table for global imports

 

Analysts attributed the downturn in the industrial sector to weak demand abroad. Trade is still a sensitive spot for China, which is managing an escalation in tensions with the United States, moreover while China began reopening its economy months ago, many other global powers only just started to lift some lockdown measures within the past few weeks.

Sales have fallen as shops, restaurants and other crowded places closed during the pandemic peak, but retail sales, which include spending by households, governments and businesses, fell 2.8% year-on-year in May, an improvement if compered with the 7.5% slump in April, but it was larger than the 2.0% fall tipped by analysts. 

Though strict anti-virus measures have been relaxed, consumers remain wary. Heavy job losses and fears of a second wave of infections continue to make consumers cautious. China’s central bank vice governor said recently that the economic hit from the pandemic was bigger than first expected and that even more policy support was needed.

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