China’s economy seen growing 2.5% in Q2 as lockdowns end, stimulus kicks in
China’s economy likely returned to modest growth in the second quarter after a record contraction, as lockdown measures ended and policymakers announced more stimulus to combat the shock from the coronavirus crisis, according to a Reuters poll.
The world’s second-largest economy likely grew 2.5 percent in April-June from a year earlier, reversing a 6.8 percent decline in the first quarter – the first contraction since at least 1992 when official quarterly gross domestic product (GDP) records started, the poll showed.
But the expected growth rate would still be the weakest expansion on record.
Forecasts by 55 analysts polled by Reuters ranged from a 3.1 percent contraction in gross domestic product (GDP) to a 4.0 percent expansion in the second quarter, reflecting uncertainty over the pace of recovery.
China’s services sector, which is dominated by smaller companies, has not rebounded as quickly as industrial production, though there are some signs that consumer confidence is gradually improving.
On a quarterly basis, GDP is expected to have grown 9.6% in April-June, compared with a decline of 9.8% in the previous quarter.
The government has rolled out a raft of measures, including more fiscal spending, tax relief and cuts in lending rates and banks’ reserve requirements to revive the virus-hit economy and support employment.
Still, analysts say the recovery remains fragile, as rising coronavirus infections in some countries overshadow improved demand for Chinese exports while heavy domestic job losses and lingering health concerns have kept consumers cautious.
Data on Tuesday showed the country’s imports in June rose for the first time this year as stimulus boosted demand for building materials, while exports also edged up as overseas economies reopened after lockdowns.
While China’s economy is showing a steady recovery, a hard battle still lies ahead as the situation remains severe both at home and abroad, state radio quoted Premier Li Keqiang as saying on Monday.
China releases second-quarter GDP data on Thursday (0200 GMT), along with June factory output, retail sales and fixed-asset investment.
Analysts polled by Reuters expect industrial output to grow 4.7 percent in June from a year earlier, quickening from a 4.4 percent rise in May, while retail sales were seen rising 0.3 percent, versus a 2.8 percent fall in May. Retail sales have slumped for five months in a row.
Fixed-asset investment is forecast to fall 3.3 percent in the first six months from a year earlier, easing from a 6.3 percent slide in the first five months, according to the poll.