China’s economy slows to the worst level in 27 years

by AGENCIES / pic by BLOOMBERG

CHINA’S bubbling and high-speed economy slipped to the slowest pace in 27 years in the second quarter of 2019 (2Q19) as the trade war with the US begins to impact the world’s second-largest economy.

Higher tariffs slapped on China’s goods by the US had slowed demand for products from the world’s most populous nation. For the last two decades, China has grown into an economic superpower, driven by exports and rising consumption at home.

But mounting trade pressure and the slapping of tariffs by the US administration had made products from China more expensive, hurting the latter’s economy.

Slowing demand also hurt consumption at home despite the rising middle-income population.

For the April-June 2019 period, China’s economy slowed to 6.2%, dampened by poor exports and local consumption. The Sino-US relationship has dropped to the lowest level in recent history as both economies continued to exchange trade threats, impacting the global economy.

Reuters reported that Beijing is expected to continue to roll out more support measures in coming months to support its slowing economy.

The impact from the US-China trade war affected growth during 1Q19.

Data showed India’s economy grew to the lowest level in over four years during the first three months of this year, Thailand’s growth was weakest in more than four years, Singapore’s 1Q growth hit a decade low, Hong Kong’s GDP growth was weakest in a decade, and the Philippines’ growth dropped to a four-year low of 5.6%.

South-East Asia’s largest economy Indonesia saw its economic growth falling below forecast, while Taiwan grew 1.72%, the slowest since 2Q16 and South Korea’s GDP unexpectedly shrank, the worst since 2008.

Malaysia and Japan were the exceptions in the region with the latter’s economy surprisingly expanded, while Malaysia’s growth for 1Q19 exceeded forecast.

“The June industrial production and retail sales data were both stronger than expected, which have encouraged speculation that stimulus is having a positive impact,” Rabobank analysts said.

The encouraging data, a result of Beijing’s efforts to prop up domestic growth and offset some of the damage from a trade war with the US, lifted the mood across equity markets.

MSCI’s index for emerging-market shares rose more than half a percent, led by Asian indices. Mainland China shares gained 0.4% and Hong Kong’s 0.2%.

South Korea’s Kospi, however, snapped a three-session winning streak and closed 0.2% lower. Concern over 2Q corporate earnings and a fragile domestic economy weighed on the index. The won was flat. — Agencies

RELATED ARTICLES

Monday, June 25, 2018

Who doesn’t love a trade war?

Tuesday, February 4, 2020

More cuts on China flights