China’s economic growth has slowed sharply in the second quarter of the year, rising 0.4% year-on-year and without expectations, official figures showed on Friday, highlighting the colossal toll on US activity. widespread blockades by Covid, which shook industrial production and consumer spending. .
Gross domestic product (GDP) was forecast to increase by 1% in the April-June quarter over the previous year, according to a Reuters analyst survey, with a significant slowdown from 4.8% of the first quarter.
In quarter-on-quarter terms, GDP fell 2.6% in the second quarter, compared to expectations of a decline of 1.5% and a revised gain of 1.4% in the previous quarter. During the first half of the year, GDP grew by 2.5%.
In March and April, total or partial blockades were imposed on major centers in China, including the commercial capital, Shanghai.
While many of these brakes have lifted since then and June data showed signs of improvement, analysts do not expect a rapid economic recovery. China is pursuing its tough zero-Covid policy amid new eruptions, the country’s real estate market is in a deep fall and global prospects are blurring.
A Reuters poll predicted that China’s growth would slow to 4.0% in 2022, well below the official growth target of about 5.5%.
The slowdown comes after China’s largest city, Shanghai, was closed for two months as it battled a resurgence of the Covid-19, tangling supply chains and forcing factories to halt operations.
Beijing has delved into a zero-covid policy of eliminating virus clusters as they emerge with rapid blockages and long quarantines, but this has affected businesses and kept consumers nervous.
A delivery man receives a takeaway bag next to a fence in a medium-risk area on June 19, 2022 and Photo: Hugo Hu / Getty Images
“Nationally, the impact of the epidemic is persistent,” the National Statistics Office said in a statement on Friday, noting the reduction in demand and the disruption of supply.
“The risk of stagnation of the world economy is increasing” as well, the statement added, noting that external uncertainties are growing.
The data comes as a result of growing challenges in China’s key real estate sector, which according to some estimates accounts for a quarter of gross domestic product, with weak home sales in recent months.
A growing number of home buyers are also refusing to pay their mortgages out of concern that their homes will not be built on time.
While there are indications that China’s economy has begun to recover since Shanghai eased blockade restrictions in June, analysts expect consumption pressure to likely persist.
The news is putting pressure on the leadership of the Communist Party, which is preparing for its 20th congress, when President Xi Jinping is expected to have another five-year term.
With Reuters and Agence France-Presse