China's economy grew at a slower-than-expected pace in the second quarter of the current fiscal year, with a slowdown in manufacturing activity, rising raw material costs, and the impact of new COVID-19 outbreak clusters on the recovery momentum. Official data released today, Thursday, indicated that GDP grew by 7.9% in the quarter from April to June compared to the same period last year, falling short of the 8.1% increase anticipated in a Reuters poll of economists.
Growth significantly slowed down after a record increase of 18.3% in the January to March period, when the year-on-year growth rate had sharply declined due to the recession triggered by COVID-19 in the first quarter of 2020.
Strong Export Demand
The Xinhua news agency reported data from the National Bureau of Statistics, indicating that China's GDP grew by 12.7% year-on-year in the first half of 2021. While the world’s second-largest economy has rebounded strongly from the COVID-19 crisis, bolstered by strong export demand and policy support, recent data suggest some fading momentum in growth.
High raw material costs, supply shortages, and pollution control measures are affecting industrial activity, while localized COVID-19 outbreaks have limited consumer spending. The National Bureau of Statistics noted that GDP increased by 1.3% quarter-on-quarter in the April to June period, exceeding the 1.2% growth forecast in the Reuters poll, while the bureau adjusted the growth in the first quarter down to 0.4% from the previous fourth quarter of last year.
Data from the statistics office showed that China’s industrial output rose by 8.3% in June compared to the previous year, slowing from an increase of 8.8% in May, while economists in the poll had forecast a 7.8% rise year-on-year. Retail sales grew by 12.1% in June year-on-year, surpassing analysts' expectations in the survey, who predicted 11% growth after a 12.4% rise in May.
