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China and India rid themselves of the recessionary wave that hits the world, after data from Brazil were released this week, confirming the dramatic fall in the world economy due to the coronavirus pandemic.
The second world economy and the country where the covid-19 arose avoided going into recession, after its GDP grew by 11.5 percent in the second quarter, after a fall of 10 in the first; both, in relation to the immediately preceding quarter.
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A set of tentative indicators suggested that China’s economy accelerated in August, supported by a strong industrial sector and equity market, and an improvement in business confidence and home and auto sales.
However, Chinese GDP growth, which in year-on-year terms (compared to the same quarter last year) was -6.8% for the first quarter and 3.2% for the second, It is one of the lowest in the Asian giant in recent decades.
However, there is optimism because the Chinese economy continued to climb from the downturn in the first quarter, with government-led investment stimulating demand and boosting the export sector, supported by some reopening of foreign economies.
The key to the rebound, according to analysts, has to do with the fact that the affected service industries have been recovering due to the fact that the Government has made the virus control measures more flexible, and more subsectors, such as cinemas, have opened again.
Both manufacturing and services PMIs are expected to stabilize within the expansive territory, with the possibility of a slight acceleration
“Both manufacturing and services PMIs are expected to stabilize within the expansive territory, with the possibility of a slight acceleration,” said Liu Xuezhi, an economist at Bank of Communications in Shanghai.
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Experts point out that there is still much to improve, in particular in increasing the demand for products from small and medium-sized industries so that all market mechanisms are geared towards a reestablishment of the dynamics prior to the pandemic: “The recovery in demand is slower than that of production, which is beginning to weigh down the economic recovery.a ”, warned the China Logistics Information Center.
But this panorama still looks distant for the other global and regional powers. After India on Monday, Brazil released yesterday a historic drop in its GDP in the second quarter, thus following the wake of recessions caused by the covid-19 pandemic in the world economy, with the sole exception of China.
The new coronavirus and the confinement measures led the powers to a sharp decrease in Gross Domestic Product, in many cases unprecedented since the current calculation methods were established.
Brazil, the leading economy in Latin America, recorded a record contraction of 9.7 percent in the second quarter of the year compared to the first. Second country in the world with the most deaths from the coronavirus pandemic, with more than 121,000 deaths, officially entered recession with the addition of the 2.5 drop during the first quarter.
Two tourists leave the traditional Boquería market, in Barcelona, a city that has been hit hard by the virus.
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India, another emerging giant that pays a heavy cost for COVID-19 with more than 65,000 deaths, reported 24 hours before a historic 23.9 year-on-year decline in its GDP between April and June. ANDThe country avoided recession for now since between January and March it had grown 3.1.
The United States, the world’s No. 1 economy, suffered a 9.5 percent drop in the second quarter, after a 1.3 percent decline in the first, according to the OECD, while US government statistics reported a change in the annual pace of the -32.9% between April and June, although these figures are not comparable with those of other countries.
After entering a recession in the first quarter, Japan’s GDP fell by 7.8 in the second quarter, representing the third consecutive quarter that the Japanese economy is in the red. The decline in the Japanese economy represents the largest since comparable data began to be collected in the country of the rising sun in 1980.
In Europe, the outlook is not encouraging either. The euro area as a whole recorded a negative ‘growth’ of 12.1 percent in the spring, after having fallen by 3.6 percent in the first three months of the year, which represents by far the most significant drop since the start of the time series in 1995 by the European Statistical Office (Eurostat).
Germany, the main economic engine of the Old Continent, experienced a decrease in GDP of 9.7 in the second quarter, after having also closed the first negative, with -2 percent.
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However, the most important drop in the euro zone occurred in Spain, with a decline of 18.5% in the second quarter, after having fallen by 5.2% in the first. The 60 percent drop in tourism income and 33 percent in exports are at the source.
It was the United Kingdom, however, the European country where GDP experienced a more important decrease after falling to 20.4% between April and June, after having done so by 2.2% between January and March.
The good news comes from the major North Asian nations – China, South Korea and Taiwan – which have been leading the rally due to their larger tech industries and better control over COVID.
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INTERNATIONAL DRAFTING
* WITH INFORMATION FROM BLOOMBERG AND AFP
