China鈥檚 economy likely to stay tepid in June
Print Edition
CHINA’S economy may continue to be tepid in June, with trade lackluster and little improvement in industrial production and retail sales, analysts said before the release of the key data next week.
“We expect June’s economic data to be weak again,” said Wang Tao, chief economist for China at UBS. “The sluggish real economy is prompting the authorities to escalate policy support.”
Tang Jianwei, an economist at the Bank of Communications, said China’s economy has hit the bottom in the second quarter and although signs of stabilization were seen there was no notable rebound.
Wang expected industrial production to likely soften again in June, capping second-quarter economic growth at 6.9 percent.
Tang, on the other hand, said industrial production growth may quicken to 6.4 percent, slightly up from 6.1 percent a month earlier.
The official Purchasing Managers’ Index, a comprehensive gauge of operating conditions in manufacturing, was flat at 50.2 in June, indicating marginal growth in large state-owned industrial companies.
Property sales may have surged ahead in June thanks to the removal of curbs on purchases, but new construction may struggle amid a cooling economy and large inventory overhang, Wang said.
“As a result, both current construction and property investment should remain anemic at low single-digit growth,” Wang said.
Trade may disappoint again.
“Exports probably grew feebly while lackluster domestic demand may continue to undercut June’s imports,” Wang said.
“Overall, the languishing activity in the second quarter, marked by limp production and sluggish demand, has put this year’s growth target at risk,” Wang said.
To buttress the economy, China has escalated policy support during the past months such as cutting interest rates and reserve requirement ratio.
The Consumer Price Index, the main gauge of inflation, was likely to rise around 1.3 percent last month, up from the 1.2-percent gain a month earlier. The Producer Price Index, the factory-gate measurement of inflation, may shrink 4.6 percent, the same as that in May, Tang said.
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