China, Economic Slowdown in the Second Quarter

The Chinese economy is growing at a pace lower than expected in the second quarter of 2023.

The Gross Domestic Product is up 0.8% for the period of April, May, and June, compared to 2.2% in the first quarter, but this is still better than the 0.5% estimate. Year-over-year, GDP grew by 6.3% in the second quarter, accelerating from 4.5% in the first three months of the year, but clearly below the 7.3% growth forecast.

China, as we know, had the most severe and lengthy anti-COVID lockdowns that ended just six months ago. But the economy is struggling to restore and maintain the vigor of the first stage after the restrictions had been lifted. In the second quarter, domestic and overseas demand weakened, and now there is increasing pressure for a variety of major growth stimulus measures. At the same time, the Dragon is facing the problem of rising debt and unemployment, which means that policies need to be carefully balanced.

Meanwhile, Morgan Stanley has cut the prospects of China’s 2023 GDP growth, which is now expected to be 5% per annum versus the previous estimate of 5.7%. At the same time, stocks in Asia and the Pacific weakened precisely because of the unrest associated with the slowdown in Beijing.