The Organization of the Petroleum Exporting Countries (OPEC) in its July Monthly Oil Market Report (MOMR) kept its China 2020 economic growth forecast at 1.3%. The world’s second-largest economy plunged by 6.8% year-on-year in Q1 with the slowdown expected to continue throughout the year due to weak domestic and external demand challenges stemming from the coronavirus pandemic. However, it is expected to post growth of 6.9% in 2021, driven by an expected rebound in local and export demand.
The government’s relief measures and support to infrastructure plans, including 5G projects, are expected to provide a boost in China’s GDP. However, financial instability concerns prevent the government from increasing its stimulus package further. Meanwhile, foreign trade is still under pressure with exports slumping to $206.81 billion, and imports to $143.89 billion in May. China’s trade surplus narrowed to $121.36 billion in the first five months of 2020, from $127.09 billion a year earlier.
Inflationary pressure continued to ease in China, with the CPI falling to 2.5% year-on-year in May, while PPI declined by 3.7% year-on-year, marking the sharpest deflation rate since April 2016. Meanwhile, retail sales continued to fall by 2.8% year-on-year in May, following a 7.5% drop seen in April.
China’s industrial output increased by 4.4% year-on-year in May, improving from 3.9% growth in April. A PMI survey showed the index for the manufacturing sector rose to 51.2 in June from 50.7 in May, while the index for the service industry rose to 58.4 in June from 55.0 in May, marking the most significant increase in the services sector since April 2010.
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Published on July 15, 2020 6:28 PM (GMT+8)Last Updated on July 15, 2020 6:28 PM (GMT+8)
