Next week we see the release of the second quarter GDP from the Chinese economy. GDP is forecast to come in at the lower end of the 5.8%-8.0% year-on-year range.
Trade figures already released which round out the second quarter indicate that net exports won’t be playing much of a role in second quarter GDP either. The third quarter has all the potential to be weak, which should be a consideration for markets.
Weak economic readings over the past few weeks pointed to a slowing post-COVID economic recovery in the country, with a Reuters poll forecasting that the economy barely grew 0.5% in the second quarter.
The Chinese economy grew by 2.2 percent on a seasonally adjusted basis in the three months to March of 2023, picking up from an upwardly revised 0.6 percent growth in the fourth quarter and matching market forecasts.
This was the third straight quarterly expansion, coming after Beijing lifted COVID curbs last December and eased a three-year crackdown on tech firms and property.
That said, recent data showed the recovery remains uneven, with consumption, services, and infrastructure spending perking up but slowing inflation and soaring bank savings raising doubts about demand.
Meantime, the central bank cut lenders’ reserve requirements for the first time this year in March while Beijing pledged to launch more fiscal stimulus. Also, the Chinese economy expanded 3% in 2022, the lowest since 1976 if 2020 is excluded, and well below the government target of 5.5%.
The Gross Domestic Product (GDP) in China was worth 17963.17 billion US dollars in 2022, according to official data from the World Bank. The GDP value of China represents 7.97 percent of the world economy.
1Y and 5Y loan prime rates due at the end of the month will not likely change, although we should probably expect these to come down over the coming months after further reductions in PBoC policy rates.