In the second quarter of this year, China’s GDP shrank substantially as widespread coronavirus lockdowns affected businesses and consumers.
The gross domestic product (GDP) decreased by 2.6% from the previous quarter to the three months ending in June.
During this time, major cities across China, notably the financial and manufacturing hub Shanghai, were placed under complete or partial lockdown.
As the nation continues to pursue its “zero-Covid” strategy, this has occurred.
The second-largest economy in the world grew by 0.4% year-over-year during the April-June quarter, missing estimates of a 1% expansion.
“Second quarter GDP growth was the poorest since the beginning of the pandemic,” Tommy Wu, chief economist at Oxford Economics. “Lockdowns, particularly in Shanghai, adversely hampered activity at the beginning of the quarter.”
As a result of the removal of several of these restrictions, the country’s economic performance improved last month, according to official data.
“The majority of the lockdowns were lifted in June, which increased activity. However, the real estate downturn continues to impede expansion “Mr. Wu added.
Meanwhile, Jeff Halley, senior market analyst for the Asia Pacific at trading platform Oanda, told that today’s GDP report from China contained some bright spots.
“The GDP was worse than anticipated, but unemployment fell to 3.5% and retail sales beat expectations,” he remarked.
Mr. Halley continued, “Financial markets are likely to focus on the retail numbers, which indicate that the Chinese consumer is in better shape than anticipated.”
However, many economists do not anticipate a rapid economic recovery for China as the government continues to implement its zero-Covid strategy to halt the spread of coronavirus.
In recent months, the prognosis for the global economy has significantly deteriorated, while the country’s formerly thriving real estate market is in a profound downturn.
GDP measures an economy’s size. Economists and central banks regularly monitor the expansion or contraction of the economy as it is one of the most significant indicators of economic health.
It assists organizations in determining when to expand and hire more employees or when to invest less and reduce the workforce.
Governments also utilize it to inform their tax and spending decisions. Along with inflation, it is a crucial indicator for central banks when deciding whether to raise or cut interest rates.
