Spotlight on China Where GDP Contracted by Greater-than-Forecast 2.6% Last Quarter
July 15, 2022
Unlike any other country, China’s government treats Covid with no mercy, and so when the highly contagious subvariant emerged in March, officials resorted to aggressive lockdown tactics to stamp it out, regardless of economic cost. The 2.6% quarter-on-quarter slide was about a percentage point more than expected and the most since 10.5% plunge in the first quarter of 2020. That compressed on-year growth to 0.4% in the quarter and 2.6% in the first half of this year versus the governments full-2022 target of 5.5% and economic growth of 8.1% during 2021.
The slew of June monthly indicators from China, also released today were better, but bear in mind that Covid is back on the rise, so the revival of activity may lose steam again. In June, industrial production and retail sales posted on-year advances of 3.9% and 3.1%, and the jobless rate dropped 0.4 percentage points to 5.5%. Fixed asset investment increased 6.1% on year in the first half, more than its 4.9% rise in full-2021.
Trade figures reported today accentuated the haves and the have nots, depending on whether one is an exporter or importer of energy. Euroland recorded an 8th straight seasonally adjusted trade deficit, amounting to EUR 26.0 billion in May. The unadjusted deficit in January-May of EUR 113 billion compares to a surplus of EUR 83.7 billion a year earlier. Indonesia, on the other hand, had a record $5.09 billion trade surplus in June.
Japan’s tertiary index of service sector activity rose 0.8% in May, the third straight monthly rise. The index was 3.6% above its year earlier level after increasing only 1.5% on average in full 2021.
New Zealand manufacturing purchasing managers index dropped 3.2 index point and to below the 50 breakeven level. At 49.7, it was its weakest in ten months.
Italian CPI inflation of 8.0% in June was its highest in 437 months and up from 1.3% a year earlier.
Polish CPI inflation rose to a 308-month high in June of 15.5%. Bulgarian CPI inflation of 16.9% was at a 289-month high, and Croatia’s 12.1% inflation was the most ever.
Car registrations in the European Union were 14% below their year-earlier level in the first half of 2022.
The weighted dollar index settled back 0.2% today. Stock markets saw a respite too. The price of WTI oil rose 1.8%, however.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: China GDP and industrial production, Euroland trade balance, Japanese tertiary index
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