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China Reports Over 3% Growth in Economy as Country Recovers from Coronavirus

After suffering losses in the first quarter (Q1) of 2020, China has revealed that its economy grew by 3.2% in the second quarter (Q2). The pandemic, which began in China, affected the country’s economy, as well as that of other countries. The pause on economic activity, including the lockdown, caused China’s GDP to plunge by 6.8%. As normalcy returns and economic activity resumes, China is now recovering its earlier losses.

A few months ago, China reported that its first-quarter Gross Domestic Product (GDP) declined by 6.8% from a year ago. Data from the National Bureau of Statistics of China revealed that the world’s largest economy reduced because of the coronavirus pandemic. Since the country started its official quarterly record in 1992, the 2020 Q1 result performance is the first GDP decline.

According to a Reuters report, 55 Analysts predicted China’s GDP would grow by 2.5% in the second quarter. This prediction came in a poll conducted by Reuters, where the analysts said industrial output would grow 4.7% in June, over the previous year. Also, the analysts forecasted a 0.3% rise in retail sales, against its 2.8% fall in May. Predictions on fixed-asset investments also stated that it would fall by 3.3%.

However, China’s Q2 report shows an improvement in the analysts’ predictions. In June, after restrictions eased following the global lockdown, the country’s dollar-dominated exports and imports rose. June’s custom data increased as exports rose by 0.5% while imports climbed 2.7%. Also, data from China’s customs agency revealed that yuan-dominated exports jumped 4.3% from the previous year, and imports rose 6.2%.

In addition, the June data also revealed that China’s trade deal with the U.S. increased to $29.41 billion. This is a more than $2 billion increase over the $27.89 billion recorded in May. However, tensions worsened between both countries as U.S. President Donald Trump blames China for not curbing the coronavirus’ spread. According to Trump, the relationship between the two countries has been “severely damaged” by the pandemic. With this, the president said he is not thinking about the “phase two” of the deal as he has other things in mind.

Gradually, China is recovering from the effects of the coronavirus, despite the fact that other markets are still under the serious influence of the pandemic.

In a press release, the National Bureau of Statistics of China said:

“Generally speaking, the national economy overcame the adverse impact of the pandemic in the first half gradually and demonstrated a momentum of restorative growth and gradual recovery, further manifesting its development resilience and vitality.”

Addressing the recent increase in China’s domestic demand, the CEO of an investment firm The Global CIO office Gary Dugan, said:

“…domestic demand is holding up very well and indeed accelerating… It’s good news to commodities markets and good news to global growth.”

Speaking to CNBC’s Street Sign, China’s chief economist at TS Lombard said he expects the recent recovery to hold for at least the next two quarters. According to Bo Zhuang, the domestic economy is doing well with growth in infrastructure and resumption of the interprovincial movement. He also predicts a 5% recovery is “forseeable” in the next two quarters. 

China Reports Over 3% Growth in Economy as Country Recovers from Coronavirus

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