China: Positive outlook, but clouds gathering

great wall of china

In the first quarter of 2021, economic output in China increased by only 0.6 percent quarter-on-quarter. In the previous three quarters, gross domestic product had risen much more strongly following the pandemic-related slump at the beginning of 2020. While China was able to prevent the spread of the corona pandemic in the country, the vaccination program was initially rather sluggish by international standards. Among other things, this has meant that international travel has remained severely restricted to date. Most recently, however, the vaccination campaign has been expanded.

Chinese economic growth continues to be supported to a significant extent by infrastructure investment and foreign demand, which stimulate construction activity and equipment investment. The recovery in private consumption has been slow so far, but is expected to gain some momentum in the course of this year. The Chinese economy is being dampened by the high level of corporate debt and the difficulties of some financial institutions, which also restricted the central bank’s scope for monetary policy during the pandemic. In view of steady economic expansion, monetary and fiscal policy can be expected to gradually become less expansionary over the course of the forecast period. All in all, the GDP growth rate is likely to be 7.9 percent in the current year. In 2022, the Chinese economy will probably expand by 5.2 percent.

Email: info@eagle-economist.com

Processingā€¦
Success! You're on the list.

Some of my blog posts and economic forecasts are first reserved to my paying subscribers. After two weeks, all articles are publicly available. If you would like to get instantaneous access, you can subscribe for 5 US dollars per month (or the equivalent amount in your currency). You can unsubscribe at any time:  

Email: info@eagle-economist.com

%d bloggers like this: