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China's GDP growth slows to 27-years low

Jul 24, 2019 China
China's GDP growth slows to 27-years low
The economic growth of the Asian giant slowed to 6.2% in the second quarter of the fiscal year, reflecting the weakest pace in the last decades. The US-China trade war is starting to pressure economic growth, analysts say
According to several forecasts China’s GDP growth could slow to 6% to 6.1% in the second half of the year, hitting the lower end of the target range set by Beijing for 2019: 6%-6.5%.

One of the causes behind the slowdown is the intensification of the trade pressures, especially since May when Washington raised tariffs on Chinese goods. While the two sides have since then agreed to resume negotiations and put on hold additional tariffs, a final agreement is still missing, what adds uncertainty to the entire world.

The global slowdown and the trade war developments might even mean exports post growth close to zero. On the other hand, analysts in the country are expecting domestic demand to gradually recover.

In this scenario, it is expected that the authorities might give some additional support to the economy, but the set of measures to be implemented by the authorities is not known. Speculation exists around cuts in banks’ reserve ratios and the focus on financing tools to support small companies. However, nothing has been implemented so far. In the end, analysts consider the room for more aggressive monetary policy is being limited by fears of structural risks.

While we wait to see the figures for June's trade and GDP growth, it might be worth to catch up on the latest Trade war updates - HERE.

Photo by Austin Distel on Unsplash

Source: Reuters

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