BEIJING- China’s economy grew more slowly than expected in the second quarter, as slowing manufacturing activity, higher raw material costs and new COVID-19 outbreaks weighed on the recovery momentum.
Gross domestic product (GDP) expanded 7.9 percent in the April-June quarter from a year earlier, official data showed on Thursday, missing expectations for a rise of 8.1 percent in a Reuters poll of economists.
Growth slowed significantly from a record 18.3 percent expansion in the January-March period, when the year-on-year growth rate was heavily skewed by the COVID-induced slump in the first quarter of 2020.
June activity data slowed from the month before but beat expectations.
“The numbers were marginally below our expectation and the market’s expectation (but) I think the momentum is fairly strong,” said UOB economist Woei Chen Ho in Singapore.
“Our greater concern is the uneven recovery that we’ve seen so far and for China the recovery in domestic consumption is very important…retail sales this month was fairly strong and that may allay some concerns.”
While the world’s second-largest economy has rebounded strongly from the COVID-19 crisis, buoyed by solid export demand and policy support, data in recent months suggest some loss in momentum. Higher raw material costs, supply shortages and pollution controls are weighing on industrial activity, while small COVID-19 outbreaks have kept a lid on consumer spending.
Investors are watching to see if the central bank is shifting to an easier policy stance after the People’s Bank of China announced last week it would cut the amount of cash that banks must hold as reserves.
The move released about 1 trillion yuan ($154.64 billion) in long-term liquidity to bolster the recovery and came even as policymakers have sought to normalize policy after the economy’s strong rebound from the coronavirus crisis to contain financial risks. – Reuters
