Major institutions forecast China′s second half economic growth below 7 percent Description video: Global institutions expect China′s growth to slow in the second half of the year，…despite devaluing its currency.\nConcerns are rising over how the slowdown could impact Korea. \nKwon […]
Major institutions forecast China′s second half economic growth below 7 percent
Global institutions expect China′s growth to slow in the second half of the year，…despite devaluing its currency.\nConcerns are rising over how the slowdown could impact Korea. \nKwon Soa reports. \nChina reached its target of seven percent growth in the first half of the year，… but it′s likely to fall short of that target in the second half.\nFifteen major financial institutions are predicting an average rate of 6－point－9 percent.\nThe IMF and OECD both forecast a rate of 6－point－8 percent.\nWhile there was some hope for a better outlook in the second half，… due to structural reforms within China′s government，…\n…economic figures from last month，… show they didn′t help much yet. \nExperts say China′s slowdown is a result of policies focused on over investment， and a surplus in stocks.\nAnd the real estate market，… which is responsible for around 15 percent of the nation′s growth，… has been hit hard by the recent stock meltdown.\nConcerns are mounting slow second－half growth will have an impact on Korea， as it′s highly dependent on Chinese exports.\nAccording to the Korea Development Institute， every one percentage point drop in growth in China could mean up to a zero－point－1－7 percentage point drop for Korea′s growth. \nHyundai Research Institute even estimates a fall of up to 0－point－4 percentage points.\n\n″China′s slow growth is expected to continue next year too. That′s why Korea should develop new industries or target China′s domestic market，… with for example beauty products or Korean wave contents.″\nBut， some analysts say it′s not going to be that serious.\n\n″A fall to the 6 percent range will not happen. Even if， it would affect Korea′s stock market， but we already experienced that…. and with exports already declining throughout the year，… we don′t expect too big of a shock.″\nIf China′s growth dips below 7 percent，… it′s going to be the lowest in a quarter of a century.\nKwon Soa， Arirang News.
China predicted a difficult second half of the year
The economic recovery in China may sink in the second half of 2020 after a month of rapid growth. So says Michael Spencer, chief economist at Deutsche Bank and head of research for the Asia-Pacific region..
«China is recovering noticeably after the Covid-19 epidemic. All data indicate the country is close to V-shaped recovery», – he said in an interview with CNBC.
However, the future looks less clear.
«If you look at the statistics, people in China are still very wary of visiting restaurants and cafes. Cinemas and concert venues are still closed. But retail sales of goods have almost completely recovered to their usual level.», – noted Michael Spencer.
He expects the consistent growth rate to slow month by month until the end of this year. Even sales of medical equipment, which have become a very important factor in export growth, will sag.
The latest economic data releases still point to a recovery in the Chinese economy. In June Caixin / Markit manufacturing Purchasing Manager official and private indices showed growth compared to the previous month.
«The tech sector showed progress in the fourth quarter of last year, and it should have been an important differentiator for the region compared to the US and Europe. He still feels good now», – said the expert.
At the same time, he predicts that imports of electronics in China will start to sink steadily, as many suppliers have not yet recovered from the economic shock caused by the pandemic..
«A likely double-digit decline in GDP in the rest of the world will hit Chinese exports very hard over the next quarter», – warned Spencer.