China reported that the country’s GDP grew 3.2% in the second quarter of this year, compared to the previous year, exceeding analyst expectations and recovering from the first quarter contraction.
It occurs when the blockades to contain the coronavirus outbreak in China decreased, and when Beijing implemented stimulus measures to shore up its economy.
Economists surveyed by Reuters expected gross domestic product to grow modestly to 2.5% in the April-June quarter.
China’s first quarter GDP contracted 6.8% in 2020 from a year earlier as the world’s second-largest economy took a big hit from the coronavirus outbreak. This was the country’s first decline in GDP since at least 1992, when official quarterly records began.
China’s official GDP figures are recorded as an indicator of the health of the world’s second-largest economy, but many outside experts have expressed skepticism about the veracity of China’s reports.
“Overall, the national economy gradually overcame the adverse impact of the epidemic in the first half and demonstrated a drive for restorative growth and gradual recovery, further manifesting its resilience and vitality in development,” said the National Statistical Office of China in a press release on Thursday.
The Chinese government has introduced measures to boost the economy, including tax spending and cuts in loan rates and bank reserve requirements, the amount of cash that lenders must keep in reserve.
Signs of recovery
Recent data from China shows some signs of recovery. Trade figures in June showed that China’s dollar-denominated exports and imports increased. Manufacturing activity in June also expanded compared to May, two different sets of surveys showed.
Chinese exports have been gaining “massive market share” while the rest of the world was closed, said Bo Zhuang, China’s chief economist at TS Lombard before the release of the data. China began to relax the blockade measures relatively sooner than other countries.
Zhuang said he expected China’s GDP recovery to be sustainable in the next two quarters at least, as the domestic economy appears to be “OK” with infrastructure growth and the reopening of inter-provincial travel, he told “Street Signs “from CNBC.
Zhuang said a recovery of around 5% in the next two quarters is “definitely predictable.” China’s annual GDP growth was 6.1% in 2019.
The challenges remain
Still, there are headwinds when the outbreak that emerged late last year in the Chinese city of Wuhan spread globally, infecting more than 13.5 million people worldwide and killing more than 582,000 people, according to the latest data collected by Johns Hopkins University.
China’s statistical office recognized the risks.
“Given the continued spread of the epidemic globally, the enormous impact of the evolution of the epidemic on the world economy, and the external risks and challenges that are increasing markedly, the national economic recovery was still under pressure,” he said in the statement. press.
The world economy is expected to fall into recession this year, as many governments worldwide have implemented blockades and limited business activities and social gatherings. Slow growth in world demand is expected to hurt Chinese exports.
This year, China made the rare decision not to set a GDP target due to the uncertainties of the pandemic’s impact.
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