BANGKOK (AP) — China’s economy expanded at a slower-than-forecast 4.7% annual rate in the last quarter, the government reported Monday, while emphasizing signs of improvement in factory output, income and investment.
The expansion was sharply below the 5.3% annual pace of growth seen in the first quarter of the year.
The progress this year, after growth slowed sharply during the COVID-19 pandemic, has been “hard won,” the National Bureau of Statistics said.
“Since the beginning of this year, global economic growth momentum has been weak, inflation is sticky, geopolitical conflicts, international trade frictions and other problems have occurred frequently, domestic demand is insufficient, enterprises are under great operating pressure, and there are many risks and hidden dangers in key areas,” it said in a statement.
“There are many difficulties and challenges in promoting the stable operation of the economy,” it said.
Economists say weak consumer demand and reduced government spending are dragging on growth in the world’s No. 2 economy.
The statistics bureau said the economy grew at a 5% pace in the first half of the year, at the target set by the government for around 5% growth.
In quarterly terms, the way many countries report their growth, the economy grew 0.7%.
The update came as leaders of the ruling Communist Party gathered for a once-a-decade conclave to set economic policy that was expected to focus on self-sufficient strategies for growth in an era of tensions over trade and technology.
The four-day meeting of the Communist Party’s 205-member Central Committee is the third plenary session of a five-year term that started in 2022. This year’s meeting was expected to be held last year, but was delayed.
The policies resulting from the closed-door meetings are likely to come days after it ends.
Recent bright spots suggest growth has stabilized.
On Friday, the government reported higher than expected exports in June that further boosted China’s trade surplus.
Exports grew 8.6% from the same time a year earlier, though imports fell 2.3%. The trade surplus widened to $99 billion, up from $82.6 billion in May.
The statistics bureau said Monday that factory output rose 5.3% in June.
Retail sales, a measure of consumer demand, were up 4.1% in January-May, while nominal disposable income, not adjusted for inflation, grew 5.4%, it said.
But that level of retail sales is well below expectations, noted Yeap Jun Rong of IG.
“Retail sales may be the biggest disappointment, with its significant underperformance reinforcing the weak state of consumer spending, in line with recent subdued price data and imports figure,” he said in a report.
Expanding consumer demand is seen as key to supporting sustained strong growth, but has proven difficult as companies shed jobs during and after the pandemic, causing many Chinese families to tighten their purse strings.
Despite the strong start to the year, policies to address the problems have been cautious and ineffective, as the property market continued to weigh on the economy, Louise Loo of Oxford Economics said in a commentary.
“Stagnating household credit growth, consumer confidence, and personal savings rates hint at no sign of a genuine recovery yet,” she said.
Although exports jumped in recent months, rising tariffs on imports of Chinese electric vehicles to the United States and Europe will add to obstacles facing Chinese manufacturers that are being encouraged to ramp up investment and production at a time of weak demand in the home market.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
