China has not completely escaped the crisis of confidence.
National consumer price keep flat Data released on Friday showed another sign of weakness in consumer demand in September as the world’s second-largest economy continues to shake off the impact of the coronavirus pandemic. The consumer price index (CPI) rose below analysts’ expectations of 0.2%.
Consumer prices fell in July for the first time since 2021, raising concerns that China is headed for deflation. A slight increase of 0.1% in August temporary relief Those concerns are concerning, but disappointing data for September showed the economy has yet to fully regain consumer confidence.
“CPI inflation of zero indicates that China’s deflationary pressure is still a real risk to the economy. The recovery of domestic demand is not strong and there is no significant boost from fiscal support.” said Zhang Zhiwei, chief economist of Pindian Asset Management. Reuters.
China’s deflationary woes stand in sharp contrast to the inflationary crises elsewhere in the world over the past two years. Falling prices can lead to a cycle of lower consumer spending, lower profits, lower employment and lower investment.
China is seeing some recovery.Factory activities expand Domestic travel in September and during the recently concluded Golden Week holiday period recovered to slightly above pre-COVID-19 levels in 2019 (although still below government forecasts).
Yet other data shows significant challenges remain. Data show that China’s exports fell by 6.2% last month. Customs data released on Friday— though the sharp decline was smaller than economists expected. Imports also fell 6.2% last month.
“September’s inflation data reminds us that despite recent strength in activity indicators, China’s economic recovery still faces challenges,” Robert Carnell, ING’s head of Asia Pacific research, said in a note to clients.
China’s real estate sector remains in the doldrums, with private developer Country Garden warning earlier this week that it could soon default on its property for the first time. China is also facing a youth unemployment crisis. According to the last statistics released by the National Bureau of Statistics, more than 20% of young people aged 16 to 24 were unemployed in June.
Against this backdrop of uncertainty, the IMF Trim it a little it is China’s economic growth is forecast to reach 5% in 2023, which is attributed to China’s real estate crisis and weakening confidence.
Svlook
